Snap-On (NYSE:SNA) executives said the company delivered sales growth and steady profitability in the fourth quarter of fiscal 2025 despite what CEO Nick Pinchuk described as a “turbulence” of shifting tariffs, geopolitical conflict, and U.S. government shutdown-related disruptions.
On the call, management emphasized resilience in automotive repair demand, continued investment in product development and brand building, and strength in financial services driven in part by a 53rd week in the fiscal year. The company posted fourth-quarter sales of $1,231.9 million, up 2.8% year over year, including 1.4% organic growth. Currency translation was cited as a factor in reported results, and executives also pointed to cost pressure from materials and the impact of ongoing investment spending on margins.
Quarterly results and profitability
CFO Aldo Pagliari provided additional detail, reporting consolidated gross margin of 49.2% compared with 49.7% a year ago. He said the decline primarily reflected “higher material and other costs” and a greater mix of sales in lower-margin C&I businesses, partially offset by benefits from the company’s rapid continuous improvement (RCI) initiatives. Operating expenses were 27.7% of sales, compared with 27.6% last year.
Including financial services, consolidated operating earnings were $339.6 million versus $331.9 million a year ago, and the operating margin was 25.3% compared with 25.5%. Net earnings were $260.7 million, or $4.94 per diluted share, up from $258.1 million, or $4.82 per share, in the prior-year quarter. The effective tax rate was 22.3% versus 22.5% last year.
Financial services benefit from a 53rd week
Pagliari said fiscal 2025 included 53 weeks, with the extra week falling in the fourth quarter. He noted the additional week was not material to consolidated total revenues or net earnings, but the financial services segment earned “an additional full week of interest income.” He added that, at the consolidated level, that benefit was “largely offset” by an additional week of fixed expenses, primarily personnel costs.
Financial services revenue rose to $108.0 million from $100.5 million, including $7.4 million tied to the extra week of interest income. Operating earnings increased to $74.4 million from $66.7 million, while expenses were $33.6 million compared with $33.8 million. Pagliari said total loan originations of $285.1 million were unchanged from last year, and the company reported year-end gross financing receivables of about $2.5 billion.
On credit metrics, Pagliari said the U.S. 60+ day delinquency rate for extended credit was 2.1%, up 10 basis points from the prior-year quarter and also up 10 basis points sequentially, which he characterized as a “typical seasonal increase” from the third to fourth quarter. Trailing twelve-month net losses for the extended credit portfolio were $72.1 million, or 3.67% of outstandings, and management said performance metrics remained “relatively balanced” given the environment.
Segment performance: C&I grows, Tools roughly flat, RS&I extends growth streak
Commercial & Industrial (C&I) sales increased 5% to $398.1 million. Pagliari said the change reflected 2.8% organic growth and $7.9 million of favorable foreign currency translation. He cited mid-single-digit growth with critical industry customers, a double-digit rise in power tools, and a mid-single-digit improvement in specialty torque, partially offset by lower sales into U.S. markets by the Asia Pacific business.
C&I gross margin declined to 38.6% from 41.0%, which Pagliari attributed to higher costs and product mix, including 30 basis points of unfavorable currency effects, partially offset by RCI savings. Operating earnings were $60.6 million compared with $63.5 million a year ago, with operating margin at 15.2% versus 16.7%. Both executives referenced a $4.5 million net benefit to operating expenses from refining the group’s footprint and go-to-market strategy, including a gain on a building sale offset by trademark retirements and restructuring charges.
Snap-on Tools Group sales were $505.0 million versus $506.6 million last year. Pagliari said this reflected a 0.7% organic sales decline, mostly offset by $1.8 million of favorable foreign currency. The organic decrease was driven by a low single-digit decline in the U.S., partially offset by a high single-digit gain internationally. Executives said technician uncertainty and hesitation toward longer-payback purchases continued, while the group emphasized a “pivot” toward shorter-payback items.
Tools Group gross margin improved 150 basis points to 46.1%, which Pagliari said was driven primarily by product mix and RCI savings. Operating expenses rose to 24.9% of sales from 23.5%, reflecting increased brand building and other costs. Operating earnings were $107.3 million versus $106.9 million, with operating margin improving 10 basis points to 21.2%.
Repair Systems & Information (RS&I) sales rose to $467.8 million from $456.6 million, reflecting 1% organic growth and $6.4 million of favorable currency translation. Pagliari said organic gains came from low single-digit increases with OEM dealerships and higher sales of diagnostics and repair information products to independent repair shops, while collision repair remained down year over year. RS&I gross margin was essentially flat at 46.9% versus 47.0%, with RCI savings “nearly offset” the impacts of tariffs and higher material costs. Operating earnings were $117.7 million compared with $121.4 million, and operating margin fell to 25.2% from 26.6%, which executives attributed to increased investment in software development and brand building.
Market and product commentary: aging vehicles, complexity, and new launches
Pinchuk said automotive repair conditions remain “very favorable,” citing the average age of the “car park” at 12.8 years and rising, along with increasing vehicle complexity and higher household spending on repairs. He also described rising technician wages and increasing hours worked, and said shop owners report difficulty finding enough technicians.
Management highlighted multiple product launches discussed during the quarter, including:
- C&I power tools: a new “Nano Axcess Cordless Lineup,” described as a compact tool intended for low-torque applications and designed for fast payback; and a “ControlTech+ Torque Wrench” with features aimed at critical-industry use, including intrinsic safety certification.
- Tools Group: a seven-piece long shaft impact socket set designed to reach recessed fasteners, which Pinchuk called a “$1 million hit product,” and a new 54-inch Masters Series roll cab storage configuration positioned at a mid-range price point.
- RS&I: the Snap-on MT2600 diagnostic platform, which management described as an entry-level diagnostic device designed for a broad range of vehicles and faster setup through automatic VIN-specific identification.
In Q&A, Pinchuk said tool storage remained down year over year in the Tools Group, while “hand tools was better, diagnostics was down, power tools was up.” He also characterized diagnostics results as influenced by product-cycle “lumpiness,” contrasting earlier launches of higher-priced diagnostic products with the newer, lower-priced MT2600 launch.
Capital allocation, liquidity, and 2026 outlook items
Pinchuk reiterated Snap-on’s dividend record, noting the company has paid dividends every quarter since 1939 without interruption or reduction, and said the dividend was increased 14% in November for the 16th straight year of increases.
Pagliari said fourth-quarter cash provided by operating activities was $268.1 million, down from the prior year, primarily due to higher cash taxes. The company repurchased 227,000 shares for $80.4 million during the quarter and ended the year with $260 million remaining under existing repurchase authorizations. Snap-on ended the year with $1,624.5 million in cash, and Pagliari said the company also had more than $900 million available under credit facilities, with no borrowings outstanding.
For 2026, Pagliari provided several planning assumptions: corporate costs of about $28 million per quarter, capital expenditures of about $100 million for the year, and an expected effective tax rate in the 22% to 23% range.
About Snap-On (NYSE:SNA)
Snap‑On Incorporated (NYSE: SNA) is a designer, manufacturer and marketer of tools, diagnostic equipment, repair information and shop equipment for professional users. The company’s product range includes hand and power tools, tool storage and cabinets, diagnostic scan tools and software, shop equipment such as lifts and tire changers, and specialized specialty tools for automotive, aviation, marine and industrial applications. Snap‑On also offers information and workflow solutions that combine diagnostic data, repair procedures and parts information to support professional technicians.
Founded in 1920 and headquartered in Kenosha, Wisconsin, Snap‑On has established a long history in the professional tools market.
