Snap-on Q4-23 sales rise 3.5% over Q4-22
Snap-on Inc. announced 2023 operating results for the fourth quarter and full year. Net sales of $1,196.6 million in the fourth quarter of 2023 represented an increase of $40.7 million, or 3.5%, from 2022 levels, reflecting a $26.1 million, or 2.2%, organic gain, $5.5 million of acquisition-related sales, and $9.1 million of favorable foreign currency translation.
Operating earnings before financial services for the quarter of $257.9 million compared to $248.0 million in 2022. As a percentage of net sales, operating earnings before financial services were 21.6% in the fourth quarter compared to 21.5% last year.
Financial services revenue in the quarter of $97.2 million compared to $88.3 million in 2022; financial services operating earnings of $67.9 million compared to $63.9 million last year.
Consolidated operating earnings for the quarter of $325.8 million, or 25.2% of revenues (net sales plus financial services revenue), compared to $311.9 million, or 25.1% of revenues, last year.
The fourth quarter effective income tax rate was 21.4% in 2023 and 22.0% in 2022.
Net earnings in the quarter of $255.3 million, or $4.75 per diluted share, compared to net earnings of $238.9 million, or $4.42 per diluted share, a year ago.
Full year net sales of $4,730.2 million in 2023 represented an increase of $237.4 million, or 5.3%, from 2022 levels, reflecting a $250.7 million, or 5.6%, organic gain and $5.5 million of acquisition-related sales, partially offset by $18.8 million of unfavorable foreign currency translation. Full year net earnings of $1,011.1 million compared to net earnings of $911.7 million last year, and diluted earnings per share of $18.76 represented an increase of 11.5% from $16.82 per diluted share in 2022.
“We’re encouraged by our 2023 performance which reflects steadfast progress along both our runways for growth and our runways for improvement, and aligns with our ongoing, longer-term expectations for sales and operating income expansion, all achieved against the significant variation and turbulence that mark the commercial arenas of today,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “In the fourth quarter, our businesses serving critical industries demonstrated continuing positive momentum and the acquisition of Mountz, Inc. extended our product offering for this important customer segment where the need for precision is building and the penalty for failure is high. We’ve again leveraged our Snap-on Value Creation Processes to deliver profitability and earnings gains in an uncertain environment. While this quarter exhibited variability in some operations, we are confident in believing that the resilience of our markets, the substantial strength of our enterprise, and the considerable capabilities of our experienced teams will provide for further advancement in the periods to come. Finally, I want to thank our franchisees and our associates worldwide for their valuable contributions, for their unfailing dedication, and for their deep belief in our prospects as we move forward through 2024 and beyond.”
Segment Results – Fourth Quarter
Commercial & Industrial Group segment sales of $363.9 million in the quarter compared to $343.2 million last year, reflecting an $11.6 million, or 3.3%, organic gain, $5.5 million of acquisition-related sales, and $3.6 million of favorable foreign currency translation. The organic increase is primarily due to higher activity with customers in critical industries, partially offset by lower power tool volumes.
Operating earnings of $54.1 million in the period, including $1.4 million of unfavorable foreign currency effects, compared to $47.9 million in 2022. The operating margin (operating earnings as a percentage of segment sales) improved 90 basis points to 14.9% in the quarter from 14.0% last year.
Snap-on Tools Group segment sales of $513.3 million in the quarter compared to $542.7 million last year, reflecting a $31.0 million, or 5.7%, organic sales decline, partially offset by $1.6 million of favorable foreign currency translation. The organic decrease is due to lower activity in the U.S. operations, partially offset by higher sales in the segment’s international operations.
Operating earnings of $111.0 million in the period compared to $116.1 million in 2022. The operating margin of 21.6% compared to 21.4% a year ago.
Repair Systems & Information Group segment sales of $450.8 million in the quarter compared to $437.9 million last year, reflecting an $8.8 million, or 2.0%, organic sales increase and $4.1 million of favorable foreign currency translation. The organic gain includes higher activity with OEM dealerships and increased volumes of undercar equipment, partially offset by lower sales of diagnostic and repair information products to independent repair shop owners and managers.
Operating earnings of $113.3 million in the period compared to $110.6 million in 2022. The operating margin of 25.1% compared to 25.3% last year.
Financial Services operating earnings of $67.9 million on revenue of $97.2 million in the quarter compared to operating earnings of $63.9 million on revenue of $88.3 million a year ago. Originations of $303.1 million in the fourth quarter represented an increase of $3.4 million, or 1.1%, from 2022 levels.
Corporate expenses in the fourth quarter of $20.5 million compared to $26.6 million last year.
Outlook
The company stated it believes its markets and operations possess and have demonstrated continuing and considerable resilience against the uncertainties of the current environment. In 2024, Snap-on expects to make ongoing progress along its defined runways for coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high. In pursuit of these initiatives, it is projected that capital expenditures in 2024 will be in a range of $100 million to $110 million.
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