SNA - Snap-on Incorporated (SNA) Q1 2024 Earnings Call Transcript

2024-04-18 13:24:10 ET

Snap-on Incorporated (SNA)

Q1 2024 Earnings Conference Call

April 18, 2024 10:00 AM ET

Company Participants

Sara Verbsky – Vice President, Investor Relations

Nick Pinchuk – Chief Executive Officer

Aldo Pagliari – Chief Financial Officer

Conference Call Participants

Scott Stember – Roth MKM

Christopher Glynn – Oppenheimer

David MacGregor – Longbow Research

Gary Prestopino – Barrington Research

Luke Junk – Baird

Sherif El-Sabbahy – Bank of America

Bret Jordan – Jefferies

Presentation

Operator

Good morning, and welcome to the Snap-on Incorporated 2024 First Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Sara Verbsky

Thank you, Gary, and good morning, everyone. We appreciate you joining us today as we review Snap-on's first quarter results, which are detailed in our press release issued earlier this morning. We have on the call, Nick Pinchuk, Snap-on's Chief Executive Officer; and Aldo Pagliari, Snap-on's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance. Although will then provide a more detailed review of our financial results. After Nick provides some closing thoughts, we'll take your questions. As usual, we've provided slides to supplement our discussion. These slides can be accessed under the Downloads tab in the webcast viewer as well as on our website, snapon.com, under the Investors section. These slides will be archived on our website along with a transcript of today's call.

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 projections are forward-looking statements, and actual results may differ materially from those made in such statements. 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, this 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. Additional information regarding these measures is included in our earnings release issued today, which can be found on our website.

With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Nick Pinchuk

Thanks, Sara. Good morning, everybody. As usual, I'll start with the highlights of our first quarter. I'll provide my perspectives on the results, on our markets and our path ahead. After that, Aldo will give you a detailed review of the financials. We believe that our first quarter once again demonstrated Snap-on's ability to maintain its strength to engage headwinds, to manage challenges and to leverage the multiple opportunities of our markets. Looking at the results in total, we are encouraged. Like most quarters, we had turbulence from geography to geography and from operation to operation. North America was mixed, but with significant gains in critical industries. Internationally, our consolidated results were also mixed, but yielding overall positives as our operations in Europe and Asia overcame the effects of recessions in Europe and the delayed recovery in China.

Now the results. First quarter sales were $1,182.3 million about flat to last year on an organic basis, excluding $6.7 million from acquisitions and $2.5 million from favorable foreign currency our sales were lower by 0.8%. OpCo OI was $270.9 million, an increase of $11.1 million and the Opco operating margin for the quarter was 22.9%, up 90 basis points. Now both those numbers benefited from the legal payment referenced in our release. But with or without that legal flow, our first quarter Opco OI and the margin were among our best. It's a strong statement given the turbulence of the day. Financial Services. Operating income grew to $68.3 million from last year's $66.3 million, and the results combined with Opco to raise our consolidated operating margin to 26.5%, up over the 25.6% recorded last year. And EPS, it was $4.91, including a per share benefit from a legal payment of $0.16, but up $0.31 or 6.7% from last year. So those are the numbers.

Now let's turn to the markets and the trends we're seeing as we connect with our customers. From an overall perspective, we believe the automotive repair arena remains favorable. Vehicle OEM and dealerships continue investing in tools and equipment, preparing for the tie to new models, bringing the latest technology and drivetrains to the market. And in the quarter, our Repair Systems & Information Group, or RS&I, as we call it, expanded our reach into OEM programs and took advantage of the opportunities throughout its global footprint. And as we look forward, we see further prospects for RS&I capitalizing on that trend supplying dealerships and independent garages with just the products they need to confront the wave of modern platforms that are coming. So the shops are strong....

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