What's fascinating this is Image source: The Motley Fool. DATEThursday, July 17, 2025 at 10 a.
ETCALL PARTICIPANTSChairman & Chief Executive Officer — Nick PinchukSenior Vice President & Chief Financial Officer — Aldo J.
In contrast, PagliariVice President, Investor Relations — Sara VerbskyNeed a quote from one of our analysts. In contrast, [ tected] RISKSCommercial & Industrial Group Weakness: Segment sales fell 7.
Furthermore, 6% organically in Q2 FY2025 and operating margin contracted 320 basis points to 13.
Moreover, 5% in the quarter, primarily due to ject delays and international market disruptions, particularly in Asia Pacific and Europe.
Nevertheless, Decreased Tool Storage and Loan Originations: Originations in Financial Services declined 4 (noteworthy indeed), in this volatile climate.
9% in Q2 FY2025, largely from reduced demand for discretionary big-ticket items, such as tool storage.
Increased Operating Expenses: Operating expenses as a percentage of net sales rose 170 basis points to 28 (something worth watching).
5% from prior-year levels for the second quarter, driven by higher personnel costs and the absence of a prior-year legal settlement benefit.
Negative Foreign Currency Impact: Unfavorable foreign currency exchange contributed 50 basis points of headwind to the gross margin in Q2 FY2025.
However, TAKEAWAYSConsolidated Sales: $1,179 (which is quite significant). 4 million (GAAP, Q2 FY2025), flat, with organic sales down 0. 7% in Q2 FY2025 after $8.
6 million of favorable currency translation in Q2 FY2025. Gross Margin: 50.
At the same time, 5% gross margin for the second quarter, down 10 basis points from last year, with 50 basis points of foreign currency pressure offset by savings from rapid continuous imvement (RCI) initiatives.
Operating Income: Opco operating income was $259. 1 million for Q2 FY2025, down 7 (this bears monitoring) (this bears monitoring). 6% in the quarter, excluding a prior-year gain of $11.
2 million from a nonrecurring legal win in Q2 FY2024.
Operating Margin: Consolidated operating margin before financial services was 22% for Q2 FY2025, 180 basis points below last year, mostly due to increased investment and removal of the legal payment benefit, in light of current trends.
Earnings per : $4 (this bears monitoring). 72 GAAP diluted EPS for Q2 FY2025, a decrease of $0. Nevertheless, 35 from the second quarter of the prior year, including a $0.
16 per prior-year legal payment benefit in Q2 FY2024 and a $0. 09 pension amortization headwind in the quarter, plus a $0, in today's financial world.
Additionally, 06 negative EPS impact from foreign exchange (fascinating analysis), given the current landscape.
Meanwhile, Snap-on Tools Group Sales: $491 million in sales for the Snap-on Tools Group for Q2 FY2025, reflecting a 1.
6% organic gain, with US up low single digits and international sales were flat; operating margin remained at 23, in today's financial world. In contrast, 8% for the quarter (this bears monitoring).
Repair Systems & Information Group (RS&I) Sales: $468, in today's market environment. Moreover, 6 million for Q2 FY2025, with a 2 (an important development), considering recent developments.
On the other hand, Furthermore, 3% organic gain and 60 basis-point margin imvement to 25. 6% from 25% reported in 2024; OEM dealership up double digits.
Financial Services Performance: Revenue was $101. 7 million in the second quarter, up $1.
2 million from the second quarter of the prior year; Operating earnings for financial services declined to $68, in this volatile climate. Furthermore, 2 million from $70.
2 million in 2024; loan originations declined 4. 9% to $293 million. However, Commercial & Industrial (C&I) Group Sales: $347. Conversely, 8 million for Q2 FY2025, with a 7.
6% organic sales drop, mainly driven by double-digit declines in Asia Pacific and Europe, as well as ject delays in US aviation and the military.
Cash Flow from Operations: Cash vided by operating activities was $237. 2 million for Q2 FY2025, a decline from $301, in this volatile climate.
1 million in the prior year period, primarily due to higher working capital requirements and lower net earnings.
However, At the same time, Balance Sheet & Capital Actions: Quarter-end cash of $1 (which is quite significant). Meanwhile, 46 billion for Q2 FY2025, with $111.
At the same time, 8 million in dividends paid and $79 million in repurchases; $357. 9 million of repurchase authorization remains as of quarter end, in today's financial world.
Inventory & Receivables: Inventories increased by $54, in today's financial world. However, 3 million since year-end 2024, with inventory turns of 2.
4 on a trailing twelve month basis and day sales outstanding was 65 days, down one day sequentially, amid market uncertainty.
Management Capital Guidance: Expected corporate expenses of $27 million per quarter for the remainder of FY2025.
Duct Innovation: New ducts across segments—including next-generation cordless ratchets, the CTM 550 cordless torque multiplier, and a redesigned Triton diagnostic unit priced at $4,500–$5,000—met nician demand for quicker payback tools.
Segment Margin Performance: RS&I achieved its twelfth operating income margin expansion in 13 quarters, while Snap-on Tools reported one of its top margin levels ever despite uncertainty, with an operating margin of 23, given current economic conditions.
However, SUMMARYSnap-on Incorporated (SNA 7. 37%) reported flat consolidated sales (GAAP) for Q2 FY2025 and a 0, given current economic conditions.
7% organic sales decline, with performance pressured by reduced volumes and unfavorable foreign exchange in Commercial & Industrial (C&I), but offset by organic gains in Snap-on Tools and RS&I, in today's financial world.
The gross margin (GAAP) of 50. 5% reflected operational resiliency, successfully countering currency and tariff headwinds through rapid continuous imvement (something worth watching).
Conversely, Management emphasized investment in duct innovation, notably expanding diagnostic offerings and advancing faster payback tools to capture shifting nician preferences (this bears monitoring).
Financial Services originations declined 4.
9% and tool storage sales came under pressure amid customer hesitation around high-ticket items, which management attributed to turbulence from macroeconomic and trade policy shocks (which is quite significant).
Snap-on closed Q2 FY2025 with lower net income (GAAP), reduced quarterly operating cash generation, and a stable balance sheet supporting continued dividend payments, repurchases, and a cautious apach to capital allocation, in light of current trends.
Looking forward, management reaffirmed guidance on expense structure and anticipated pension costs, while remaining vigilant on further trade developments, supply chain risk, and potential acquisition opportunities.
Chairman Pinchuk said, "we navigated the roller coaster and exited the quarter stronger than when we entered.
" highlighting confidence in core franchise performance and strategic execution, in today's market environment.
CFO Pagliari stated that Unfavorable currency translation—chiefly the Swedish krona versus the euro and US dollar—was the primary cause of a 50-basis-point decline in gross margin (something worth watching).
Inventory investment and ext supply chain lead times resulted in higher working capital, which, along with lower net earnings, reduced operating cash flow by $63.
9 million in the second quarter compared to the prior year, in light of current trends.
While management observed ject delays in C&I and pockets of hesitation among independent shop customers, order books strengthened as the quarter gressed, suggesting partial accommodation to macro shocks.
Rising personnel and brand investment costs, combined with the absence of a prior-year $11. In contrast, 2 million legal recovery, were the main drivers of increased operating expense ratios.
However, No speculative M&A pipeline specifics were given, though management ed that we have a pretty large landscape of small to mid-size targets focused on repair shops and critical industries.
INDUSTRY GLOSSARYRCI (Rapid Continuous Imvement): Snap-on's internal lean manufacturing and operational efficiency initiative, designed to drive cost savings and offset external pressures.
Additionally, At the same time, RS&I (Repair Systems & Information Group): Segment focusing on diagnostic equipment, shop management software, and services for fessional repair shops and OEM dealerships.
Snap-on Franchisee Conference (SFC): Annual event for Snap-on's franchise network, relevant for forward demand signals and near-term order flow (an important development).
Full Conference Call TranscriptNick will kick off our call this morning with his perspective on our performance (which is quite significant).
Aldo will then vide a more detailed review of our financial results (this bears monitoring). After Nick vides some closing thoughts, we'll take your questions.
As usual, we've vided slides to supplement our discussion.
This analysis suggests that se slides can be accessed under the Downloads tab in the Web viewer as well as on our website, snapon (fascinating analysis).
Com, under the Investors section, amid market uncertainty. These slides will be d on our website along with the transcript of today's call.
Moreover, Any statements made during this call relative to management's expectations, estimates, or beliefs or that otherwise discuss management's or the company's outlook, plans, or jections are forward-looking statements and actual results may differ materially from those statements, in today's market environment.
At the same time, Additional information and the factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings.
Finally, the presentation includes non-GAAP measures of financial performance which are not meant to be considered in isolation or as a substitute for their GAAP counterparts (this bears monitoring).
Additional information regarding these measures is included in our earnings release issued today, which can be found on our website.
However, With that said, I'd now to turn the call over to Nick Pinchuk. Meanwhile, Nick Pinchuk: Thanks, Sara (an important development). However, Morning, everybody.
As usual, I'll start the call by covering the highlights from our second quarter. Additionally, And I'll tell you right now, we're encouraged by the results, given current economic conditions.
Meanwhile, Resilience and balance against an environment that's been quite turbulent. Additionally, Conversely, It's one long mad minute where the commercial ground keeps shifting.
On the other hand, But with the resilience of our, the balance of our portfolio, our advantages in ducts, brand, and people, we navigated the roller coaster and exited the quarter stronger than when we entered.
So that's my view.
And as we ceed today, I'll fill you in with more color on our financial results, on our, the current environment, the gress we made, and I'll give you another take on what I think it all means.
Then Aldo will move to a more detailed review of the financials. Furthermore, Let's talk the results. Our sales of $1,179,400,000 as reported were flat to last year.
Furthermore, Nevertheless, Including $8,600,000 in favorable foreign currency translation, our organic sales were down seven-tenths of a percent, in light of current trends.
They were mixed, but overall balanced. Additionally, Opco operating income for the quarter was $259,100,000, 7. 6% below last year, which included $11,200,000 from the nonrecurring 2024 legal win.
OI margin was 22%, lower by 180 basis points versus last year, which included a higher basis points from that legal matter, in light of current trends. Notably, the gross margin was 50.
5%, 10 basis points behind last year reflecting continued resilience (an important development), given current economic conditions.
Rapid continuous imvement balanced 50 basis points of unfavorable currency transactions.
Furthermore, In effect, our OpCo OI gap primarily represented our investment in maintaining and strengthening our advantage of duct, brand, and people, believing as we did in the pandemic, that it's best to emerge from the disruption at full strength and we believe we're on course to do just that (which is quite significant), given the current landscape.
For financial services, operating earnings of $68,200,000 were down 2, considering recent developments. Additionally, 8% from last year's $70,200,000.
Moreover, And combined with the OpCo results, the overall OI margin for the quarter was 25 (an important development). 5%, which compared to the 27.
4% recorded last year, which included the legal benefit. This time was 90 basis points. EPS for the quarter was $4. 72, 35¢ below last year, in light of current trends.
16¢ from last year's legal payment was included in the 2024 number and this year's level included a 9¢ impact higher pension amortization costs (which is quite significant).
In other words, there were 25¢ of headwinds in the year-over-year comparison of EPS. On the other hand, So now let's speak the market.
Nevertheless, So those are results, but now let's speak the market (something worth watching). Additionally, We believe the automotive repair environment continues to be favorable.
Furthermore, We did see mixed but imved results with the nician. Furthermore, The tools group was up low single digits in the US network, while the international vans were flat.
Additionally, And from what we're hearing directly from the franchisees in the text, from the grassroots, I believe vehicle repair emphatically remains a very favorable place to operate, and the industry metrics continue to confirm that view.
Miles driven, average vehicle age, household spend on repairs, count, and wages, they're all up (something worth watching). Additionally, Conversely, Now the macro environment is still turbulent.
But the, uncertainty has stabilized. Additionally, Additionally, And having said that, it remains significant. In all that, however, the tools group pivot does appear to be gaining traction.
However, And overcoming the ants. You can see it in our second quarter results (an important development), in this volatile climate. Additionally, We the way the numbers are moving.
Meanwhile, It's a positive sign.
Conversely, On the other side of auto repair where repair systems and information, the RSNI group is displaying encouraging gress, expanding Snap-on's presence with repair shop owners and managers with particular strength in OEM dealerships.
Additionally, Things are looking okay. Upgrading facilities and equip you know, the OEM dealerships upgraded facilities and equipment to match the growing complexity of the new models.
Now there are pockets of hesitation on garage jects. With some independent shops thinking that delay in the turbulence is the right move.
But in general, the shops know that deeper complexity is rolling, considering recent developments. And the challenges are coming, and they must be ready.
However, So in general, the sentiment remains strong, and you can see it all over the RSNI results. And for critical industries.
Now here, we saw uncertainty and hesitation early in the period (remarkable data). Liberation Day and the weeks that ed create a lot of windage in ject planning and execution.
Many es adopted a wait-and-see apach waiting to let the trade gram develop before pulling the trigger (this bears monitoring). And we did see postponements.
However, As the quarter gressed, however, the initial shock gave way to what I would call accommodation. Meanwhile, Ject Flow came back, and our order book has grown.
This tells us that critical industries built momentum through the quarter, and they remain a very attractive place to operate despite what we believe may have been a shock blip in the quarter, given current economic conditions.
So, overall, I describe our as continuing to offer opportunities that we believe display momentum. However, Challenges do exist, there are headwinds.
But we're confident with our advantages and strengthening duct lines that solve critical tasks in our extraordinary brand, that marks the serious, the critical, and the fessional.
And our very experienced team. That's capable, committed, and battle-tested will prevail against the difficulties and can continue moving positively.
So now let's move to the segment, given the current landscape. The commercial and industrial group was the place where most impacted by the shock early in the quarter. Meanwhile, You know what.
At the same time, It has the largest international presence, and its critical industry vision has a substantial slice of ject.
So the group's second quarter as reported volume decreased 6, considering recent developments. 5%, including $4,500,000 in favorable foreign currency translation and an organic sales decline of 7.
Nevertheless, C and I's operating income was $46,900,000 below 2024 levels by $15,300,000. Moreover, Operating margin was 13 (quite telling). At the same time, Down 320 basis points.
But we did see upward motion as the quarter gressed. As the customers accommodated to the environment.
So we're confident in and committed to extending in the critical industries, in today's financial world.
And we'll keep strengthening our position with C and I as we move forward observing the task, using the insights create to create ducts that make work easier, in this volatile climate.
A great example is the next generation our next generation of the next generation quarter-inch drive fourteen four volts cordless, given current economic conditions.