Snap-On Navigates Q3 Hurdles: Slimmer Sales, Fatter Margins, And An EPS Surprise

Snap-On Inc. SNA reported third-quarter net sales of $1.147 billion, which declined 1.1% year over year and missed the consensus of $1.157 billion.

Net sales decreased by $19.2 million, or 1.7%, due to an organic sales decline and a $0.3 million negative impact from foreign currency translation, partially offset by $7.2 million in acquisition-related sales.

The gross margin expanded by 137 bps to 51.3%, and gross profit rose 1.7% year over year to $587.8 million.

Financial services revenue in the quarter was $100.4 million compared to $94.9 million in the prior year quarter.

The operating margin before financial services was 22%, up 85 bps, and the corresponding income rose 2.9% to $252.4 million.

EPS for the quarter was $4.70, beating the consensus of $4.59.

Sales by Segments: Commercial & Industrial $365.7 million (-0.20% Y/Y), Snap-on Tools $500.5 million (-2.9% Y/Y), and Repair Systems & Information $422.7 million (-2.1% Y/Y).

Snap-On held $1.313 billion in cash and equivalents at the end of the quarter, and operating cash flow totaled $274.2 million versus $285.4 million a year ago.

Outlook: For the rest of 2024, Snap-on expects steady growth, expanding in automotive repair, adjacent markets, and critical industries.

Capital expenditures for 2024 are projected at $100 million, with $65.4 million already spent. The full-year tax rate is expected to range between 22% and 23%.

Price Action: SNA shares traded higher by 2.66% at $306.00 premarket at the last check Thursday.