Snap-On Tools Segment Drives Growth While Margins Tighten In Q2 Beat

Snap-On Inc. SNA reported better-than-expected second-quarter 2025 results, surpassing both revenue and earnings consensus estimates.

Here's a breakdown of the report:

• Quarterly net sales reached $1.179 billion flat year-over-year increase and above the consensus estimate of $1.16 billion.
• Sales reflected a $8.6 million, or 0.7%, organic decline, which was counterbalanced by an $8.6 million gain from favorable foreign currency translation.
• The gross margin contracted by 15 bps to 50.5%, and gross profit fell 0.30% year over year to $595.5 million.
• Financial services revenue rose to $101.7 million (+1.2% YoY), with operating earnings at $68.2 million, up from $70.2 million, respectively, in 2024.
• Consolidated operating earnings for the quarter were $327.3 million, or 25.5% of revenues, down from $350.5 million, or 27.4%, in 2024.
• EPS for the quarter was $4.72, down from $5.07 YoY, above the consensus of $4.67.
• Operating cash flow for the quarter totaled $ 237.2 million, compared to $ 301.1 million a year ago, with $1.458 billion in cash and equivalents at the quarter's end.

Snap-on CEO Nick Pinchuk noted that the sales growth in the U.S. Tools Group, along with “solid operating earnings performance,” was achieved despite the headwinds of “general uncertainty and trade turbulence.”

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Sales by segments:

• Commercial & Industrial $347.8 million (-7.6% YoY), Operating earnings were $46.9 million, with a margin of 13.5%, down from 16.7% last year.
• Snap-on Tools $491 million (+1.6% YoY), driven by U.S. sales growth. Operating earnings were $116.7 million, with a stable margin of 23.8%.
• Repair Systems & Information $468.6 million (+2.3% YoY), driven by higher OEM dealership activity and increased sales of diagnostic products. Operating earnings were $119.8 million, with a margin of 25.6%, up from 25.0% last year.

Outlook 2025: Snap-on expects continued growth in 2025, expanding its professional customer base in automotive repair and adjacent markets, with projected capital expenditures of $100 million.

The company anticipates a full-year 2025 effective income tax rate between 22% and 23%.

Price Action: Snap-on shares are trading higher by 2.87% at $322 premarket at the last check on Thursday.

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