Nicholas Pinchuk
Chairman and Chief Executive Officer at Snap-on
Thanks, Sara. Good morning, everybody. As usual, I'll start with the highlights of our quarter and our full year, and I'll provide my perspective on the results, on our markets and our path ahead. After that, Aldo will then give you a detailed review of the financials.
The results for our fourth quarter represented that we believe, another period of forward progress. Again, we had opportunities and countered headwinds and the shape of the variated landscape changed as it regularly does. But in the end, we once again took advantage of the opportunities and overcame the turbulence.
Sales in the quarter were $1,196,600 million or $1.2 billion, sounds better that way, up 3.5% as reported from last year, excluding $9.1 million of favorable foreign currency and $5.5 million from the recent Mount acquisition. Organic sales increased 2.2%. The results represent a positive trend of some significance, demonstrating Snap-on's ability to adapt and to overcome market disruptions.
From an earnings perspective, our OpCo operating income for the quarter was $257.9 million, and the OI margin for the quarter was $21.6 million up 10 basis points compared to last year. For Financial Services, operating earnings were $67.9 million, rising from the $63.9 million recorded last year.
And the combination of the results from OpCo and from Financial Services offered an overall consolidated margin of 25.2%, also up 10 basis points. And the overall EPS was $4.75, a rise of 7.5% from the $4.42 that was registered a year ago.
Now I talked about margins, let's turn to those markets and the trends we're seeing, based on our customer connections. We're with customers all the time. We believe automotive repair continues to be clearly favorable.
Vehicle OEMs continue to see the need for upgrading dealer repair shops and enabling the shops and servicing the blizzard of new miles and technologies making the way to the market.
And preparing for that future, OEM continue, requiring dealership investments in new Under Car Equipment and essential tools to meet the challenge. It's a considerable opportunity at which Snap-on is clearly taking advantage. Activity in the independent shops is also robust. You can see it in the vehicle and repair macros, car parks. The car park is growing and getting older.
Now over 12 years old on here, cars are getting more complex and more difficult to fix and reflecting all of that, service hours are up. Household spending on repair is growing. Wages are rising. The number of technicians is moving upward fast and ship-owners keep shouting, they want more technicians, even louder than they have over the past years.
So the underlying repair business is strong. It's prospering. It was a reality that kept the text positive, even as the financial was champing over the past years and months, the recession is coming, the recession is coming.
But cash isn't everything. Cash is in everything for the people of work. Personal confidence is a balance between your current environment, the garage we see and the way you see the world evolving in sometime and sometime in the mid fall of last year, our franchisees sense that balance shifting negatively.
In recent weeks, I've been around, I visited franchisees all over the country; in Nevada, South Carolina and Wisconsin, and they all said about the same thing. The techs are cash rich, but because of the external bad news of getting for breakfast almost every day, the impact in the Ukraine, the war in the Middle East, the dysfunction at the border and the uncertainty of the upcoming election, the weight of it all appears to be turning the tech's, confidence poor.
And when this happens, based on what we've seen in other times, we've seen it happen before, our customers keep purchasing, but they gravitate towards shorter payback items. And so it appeared to be as the quarter progressed. You saw that from mid to the end of the quarter. And so repair is strong, but the techs are worrying about the way forward, still cash rich, but they appear to be wavering in their confidence. This is a big change.
Now let's move forward to critical industries. That's, of course, a bit different color. Confidence seems to be abundance across that business. This is where our commercial and industrial group or C&I, plays. We continue to see progress.
And again, the results in the quarter reflect that trend. It's a complex segment. A lot of you know this already, but I'm going to say the context, it's a complex segment embedded with essential techs where the penalty for failure is high.
It's an arena that demands precision, functionality and repeatability, all under the most grueling environments, covering a vast range of applications from the sensitive micro world of chip manufacturing to giant rugged earthmoving equipment to performance critical aviation, things even up to spaceships.
The underlying need for customization -- but in that segment, the underlying need for customization and precision both, Snap-on strength is clearly growing all across those sectors.
C&I, is also the most geographically dispersed operations. And there's, significant variations from country-to-country and created by the uncertainties in the economic political policies.
As such, we see mixed results in Europe and a continuing but slow recovery in Asia.
We also see differences from sector-to-sector with education, aviation and the military, military and general industries, all showing nice improvements where natural resources and heavy-duty are off. But shining through all that variability is our expanding strength in those critical industries.
The advantage Snap-on holds in product and brand and in people. And in the quarter, those drivers were on display. So across our corporation, I would characterize our markets as mixed, turbulent from period-to-period and from sector-to-sector, but filled with ongoing opportunity. And we believe we're well positioned to face the challenges of today, though at the end of today and those that may arise in the future.
We remain confident that we have the continuing potential along -- we have continuing potential long-run run rates for growth, and we see significant power to overcome rooted in our Snap-on value creation processes of safety, quality, customer action innovation and rapid continuous improvement, especially customer connection.
One of our substantial competitive advantages is being right where the actual paths are being pursued and in engineering the products to make the work easier by matching those insights, the insights gained with technology applied. We've seen that over time, we've seen that innovative offerings create the path to advance and to overcome any turbulence.
And in the quarter and in the year, our product line continued to advance, just kept getting stronger. And we continue to invest in Snap-on value creation to make that possible. We believe, in fact, that our product line has never been stronger. And despite the turbulence, we had more million dollar hit products in 2023 than ever before, and we believe we'll move higher again in 2023 than ever before, and we believe we'll move higher again in 2024.
Now, let's talk about the full year, the 2023 performance. Sales of $4.7302 billion represented an increase of 5.3% as reported and arrived at 5.6% organically. Opco alone exceeded $1 billion. I'd say that again, $1 billion for the first time, reaching $1.399 billion and our Opco on margin of 22%, 22% represented an average increase, an increase of 110 basis points at gangbusters.
We've never been at 22 and 110 is a great increase. And when we include financial services earnings of $270.5 million, the consolidated operating margin for the corporation year was 25.7%, up 80 basis points. Earnings per share with the year were $18.76, rising $1.94 or 11.5%. We believe these are good numbers.
Now for an individual -- for the individual operation. Now for the individual operating group. So let's start with C&I. Reported sales for the C&I group in the quarter were $363.9 million, up $20.7 million or 6%. That includes $5.5 million from the recent Mountz acquisition, $3.6 million of favorable foreign currency and our organic sales increase of $11.6 million or 3.3%. They all reflecting the strength in critical industries, partially offset by a slide in automotive power tools.
C&I's operating income for the period was $54.1 million. It was up 12.9% and the OI margin was 14.9%, rising 90 basis points and overcoming 50 basis points of headwind associated with negative currency. Again in this case, the advance was driven by strong expansion in critical industries. And our increased kitting capacity for complex orders continue to play a large role in that progress, but significant advances also spur as a regular is by new product.
Innovations like our recently launched automated tool control or ATC portal, it's the latest addition to our unique Snap-On ATC tool control product lineup. It's manufactured at our AutoCrib operation that was recently acquired in California, and the portal significantly extends the reach of our ATC systems. It enables efficient control over a much wider range of device shapes and sizes. In effect, this portal's a doorway, in line with radio frequency identification or RFID antenna, it's typically a place that enters to tool. Significant assets like hydraulic pumps, portable generators and valuable diagnostic equipment are often stored in common areas in factories or other places and enter a catalog by fixing an RFID tag.
As technicians scan the badge is entering with the portal, the system documents the devices will be in and out of the secured stores, keeping close track of these critical items, just like the base ATC system keeps track of hand and power tools moving in and out of the tool storage box, but over a much wider set of areas.
We anticipate that the new portal will be a big boost and a great opportunity for C&I in the growing area of tool control, a very important area for us. And in the fourth quarter, we saw some of that potential come to bear. So C&I, mixed progress, challenged with headwinds but clear and overall advancement, great momentum enabled by capacity expansion and by growing product power.
Now to the Tools Group. The Tools Group quarter, not at our standard. But we do see a path forward adjusting to the changing environment. As you may remember, this is where we sell to the text. Those who toil the wrenches, punch the touchscreen and those who appear to be wavering in macro confidence and those customers who under these conditions shift to lower payback or quicker payback items.
While the fourth quarter reflects our franchisees and the Tools Group pivoting to match that movement, that customer movement. Sales in the quarter were $513.3 million included in our -- and they included an organic decrease of 5.7% compared to last year. Now more to our standard, group OI margins were 21.6%, up 20 basis points, overcoming 10 basis points of negative currency and the gross margin percentage rose 200 basis points, nice gains.
As the quarter played out, the franchisee sense the change and redirected their ordering and selling focus to match the customer shifts to lower -- to faster payback items. And Snap-On is doing the same, defining a way forward, redirecting factory capacity, adopting smaller ticket marketing focus and launching innovative or quicker payback products that fit the environment.
State-of-the-art designs, like our new ratchet for a manufacturer to Elizabeth, Tennessee factory. This next evolution in our ratchet line is 102 design, we've named the Synergy series. We believe it's a game changer for technicians, a significant improvement that helps make repair work much easier. The Synergy is a short payback item that will make a clear difference right away, a 15% thinner head, an inch longer handle a 3.5-inch degree swing area, 20% more compact, all for easier access and quicker work in tight corners that they also come up like chassis areas in modern vehicles.
Synergy's internal mechanisms were reengineered to engage the primary drag with 10 contact points versus the seventh in the previous design, greatly reducing the chance of slippage, improving the tools reliability and quality even while under maximum loads. Technicians may be uncertain about the way forward, but they're confident about the synergies. They know with the Synergy. They know it will provide a quick payback. It's thinner, longer, stronger. And going forward, we'll expand that new technology -- the new 102 technology throughout the Snap-on lineup, and we believe it will quickly become a must-have all across the industry.
Also in the quarter, our Algona, Iowa manufacturing facility to reach the new quick payback, KRSC2430, a 36-inch deluxe shop cart with its with smooth mobility and a substantial payload. It offers a technician economic an attractive way to start the tools but it also allows them to position their instruments adjacent to the workplace, increasing productivity, eliminating the time walking to and from the job.
As a particularly special feature, the versal lid on this cart serves as a durable workbench when open separates into two sections, showing full and easy -- allowing full and easy access to the deep eight-inch top compartment that's underneath. The unit also includes a complete power strip where technicians charge their cordless tools, diagnostic platforms, lights and other electronic devices. The innovative cards also configured with two additional jaws. There's kind of two additional drawers underneath the sliding top, providing quick accessibility for essential and small items preventing lost times from treasure hunting and large drawers or small-scale items.
And it's a common problem with other units. And so this will really save time for the text. And like our top-of-the-line tool storage boxes, technicians can customize their cart, selecting from an array of colors and trims and so they can project their own personal identity throughout the shop. The KRSC2430 economical storage, attractive features convenient mobility, we expect it will have strong and continuing to appeal in this uncertain environment.
And shifting the product focus also requires some repositioning in the factory. Expanding the capacity to match customer preference, we're doing just that, moving to currently popular items, more dedication to short payback to products like our plexin swivel sockets and the new long nose pliers in Milwaukee, additional cart welding, breaking bottlenecks for our economical storage cart options in Algona and doubling down on synergy production in Elizabeth, Tennessee.
Finally, our sales teams are being deployed to help franchisees, giving them added energy and more time in selling shorter payback items off their truck. Well, that's the Tools Group. Shifting tech preferences, pivoting operations to ensure the way forward, adapting products, capacity and sales focus, making the most of our strengths in the turbulence.
Now for RS&I. The group results confirmed what we've been saying all along, Snap-on is well positioned to support repair shops, dealers and independents and keeping pace with the growing complexity of the car park. RS&I sales in the quarter were $450.8 million, up $12.9 million versus last year, including an organic sales rise of $8.8 million that was authored by volume with vehicle OEM programs for new models and platforms and by strong progress in undercar for both dealerships and independent shops, gains that served to offset the decrease in the big-ticket diagnostic items.
RS&I operating earnings for the quarter were $113.3 million, and the operating margin was a still strong 25.1%, but down 20 basis points, reflecting the mix shift to lower-margin under car and OEM facing and the OEM-facing activities. But just like other segments, RS&I advances are driven by new products. And even the aging car park is filled with diverse and ever-changing models. Light-duty trucks and full-size SUVs are bigger than ever requiring a range of wheel configurations and sizes somewhere over 100 pounds. And at the recent repair industry, SMA show in Las Vegas, we had one of our answers to that challenge on prominent display.
Our new automated armored wheeler series wheel balancers, specifically designed for high-volume shops that require precision and reliability made from robust steel for enhanced and rugged durability. Even a small compact footprint, the balancers intelligent operating system uses sonar technologies to automatically measure both the wheel and RIM, eliminating the need for manual intervention, a great time saver in the shop.
And for improved safety, the unit also includes heavy-duty pneumatic for us that physicians cumbersome tires on the spindle, making it unnecessary, protects and physically lift or manipulate the heavy assembly, substantially avoiding is the strain. The balancer also includes the high resolution touch screen and an intuitive interface and an effective ergonomic design. It's a powerful combination of accuracy, speed, durability and safety and the SEMA crowd clearly noticed. So that's RS&I.
Shop repair remains robust. Vehicle complexity continues to advance abundant opportunities for a great future. The group has abundant opportunities for a great future and our RSI team has the products to take advantage. Well, that's our quarter and our year.
For the quarter, sales up 3.5% as reported, 2.2% organically. OI margin reached 21.6%, up 10 basis points, and the EPS was $4.75, rising 7.5% and against the turbulence. The period was marked by extraordinary positives in the critical industry -- in the critical industries that are C&I. The Tools Group not reaching our standard, but displaying margin gains and pivoting to match the technician shifting focus and RS&I, enabling both dealerships and independent shops to meet the challenges of higher complexity in new technologies and the full year 2023 sales of $4.7302 billion, up 5.6% organically, an OI of over $1 billion rising 10.5% and OI margin of 22%, an increase of 110 basis points, 110 basis points like that and EPS of $18.76, up $1.94 or 11.5%. It was another encouraging year.
Now, I'll turn the call over to Aldo. Aldo?
