SNA | Q4 2025

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Overview

• Non-GAAP EPS of $4.94 beats by $0.02.

• Revenue of $1.23B (+2.5% Y/Y) misses by $10M.

KEY Takeaways

• Q4 revenue was $1.23B, up 2.8% year over year, with 1.4% organic growth despite a noisy macro backdrop.

• Earnings per share came in at $4.94, up from $4.82 last year, continuing Snap-on’s steady earnings growth.

• Core operating margin dipped to 21.5%, reflecting higher costs and increased spending on product development, brand, and software rather than demand weakness.

• The Tools Group saw flat sales, but gross margin improved 150 basis points to 46.1% due to better product mix and execution.

• Commercial & Industrial revenue grew 5% to $398M, driven by strength in power tools and specialty torque.

• Repair Systems & Information posted its fifth consecutive quarter of growth, with revenue rising to $468M and operating margins remaining strong at roughly 25%.

• Financial Services delivered higher earnings, with revenue of $108M and operating income of $74M.

• Operating cash flow totaled $268M for the quarter, even after higher cash tax payments.

• The balance sheet remains very strong, ending the year with $1.6B in cash and no debt drawn on credit facilities.

• Snap-on returned significant capital to shareholders, paying $127M in dividends and repurchasing $80M of stock during the quarter.

• The dividend remains a core pillar, with a 14% increase announced in November and 16 consecutive years of dividend growth.

• Larger, long-payback purchases like tool storage remain soft, but smaller-ticket categories are holding up better and demand appears to be stabilizing.

NOTES

Snap-on (SNA) closed out 2025 with a steady, unexciting quarter.

Revenue in Q4 was $1.23 billion, up 2.8% from last year. Organic growth was 1.4%, with a small boost from currency. Earnings per share came in at $4.94, up from $4.82 a year ago.

Operating income at the core business level was basically flat, and margins slipped a bit to 21.5%, mostly because Snap-on spent more on product development and brand support while also dealing with higher costs. Nothing alarming—just the tradeoff that comes with investing through uncertainty.

Management spent a lot of time explaining why they still feel good about their end markets. Cars keep getting older—the average vehicle on the road is now 12.8 years old—and newer models are more complex than ever.

That combination means repairs are harder, take longer, and require better tools and information. Even if technicians are cautious about big purchases, the underlying demand for repairs isn’t going away.

That caution showed up most clearly in the Tools Group. Sales there were basically flat at $505 million, down slightly from last year. The U.S. was a bit soft, while international markets were stronger.

What stood out, though, was profitability. Gross margin jumped 150 basis points to 46.1%, even with flat sales.

Snap-on also spent more on things like training, advertising, software, and franchisee support, which kept operating margins roughly steady. The message was pretty clear: they’re choosing to support their franchise network and brand now, rather than cutting back just to make the quarter look cleaner.

Commercial & Industrial was the growth driver this quarter. Sales rose 5% to $398 million, helped by strong demand for power tools and specialty torque products used in critical industries. Earlier in the quarter, government shutdowns slowed things down—especially in military and defense work—but activity picked up meaningfully toward the end.

Repair Systems & Information continued to quietly do its job. Sales rose to $468 million, marking the fifth straight quarter of growth. OEM dealerships and independent shops both contributed, while big-ticket diagnostic equipment was softer.

Margins are still very healthy at 25%, even though they’re down from last year as Snap-on spends aggressively on software and data.

That spending is intentional. As vehicles get more complicated, the value of fast, accurate diagnostics keeps rising, and Snap-on wants to stay ahead of that curve.

Financial Services had a strong quarter as well. Revenue rose to $108 million, and operating earnings increased to $74 million.

Part of that was helped by an extra week in the fiscal year, which benefits the financing business more than the operating segments. Credit performance ticked slightly higher on delinquencies, but management described the portfolio as balanced and in line with expectations.

Cash flow and the balance sheet remained a major strength. Snap-on generated $268 million in operating cash during the quarter, paid $127 million in dividends, and bought back $80 million of stock.

The company ended the year with $1.6 billion in cash and no debt drawn on its credit lines. When asked what they plan to do with all that cash, management stuck to the same priorities they’ve talked about for years: keep plenty of liquidity, protect the dividend, look for sensible acquisitions, and return excess cash to shareholders.

And that dividend remains a big part of the story. Snap-on has paid a dividend every quarter since 1939 without ever cutting it. In November, the company raised the dividend 14%, marking the 16th straight year of increases. Management made it clear they view the dividend as a long-term commitment, not something they adjust lightly.

In the Q&A portion of the call, management said technician demand feels “about flat,” not weak, but confidence has been shaken by nonstop macro noise. Tool storage (bigger ticket) remains the softest category, while hand tools and power tools (smaller ticket) are holding up better. Diagnostic sales were down largely because this quarter featured a lower-priced product launch versus a higher-priced launch earlier in the year.

Overall, it wasn’t a flashy quarter (or year), but it didn’t need to be. Snap-on continued to be what it’s always been: a durable business that pays a reliable dividend and keeps investing even when there are headwinds.

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