Nicholas T. Pinchuk
Chairman and Chief Executive Officer at Snap-on
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 result 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 tide of new models, bringing the latest technologies 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.
Now let's speak of the technicians, the guys and gals that twirl the wrenches, punch the keys, or tap the screens. This quarter, I had multiple occasions to visit with franchisees, and the report was generally that shops are humming, the bays are running at full capacity, and all that mirrors what the macro data says nationally. The car park is continuing to age, now at an average of 12.5 years, and I think moving up. Technician wages are rising, and their hours worked are increasing. We believe it all signals an ongoing and robust demand for repair. And you know it's true.
The activity is strong, but there is a difference between the industry overview and the technician outlook for the future, and by extension, their purchasing sentiment. The barrage of bad news, inflation, two wars, the border, the Red Sea, the election, the Iran bombing. For the people of work, the fear of what's coming around the corner impacts the outlook. And paraphrasing the characters of Dune, fear is the outlook killer. It erodes confidence. Techs are well-positioned, and they continue to invest, but it's in quick payback items that will make a difference right away, but don't require a long-term payment stream. And in response, we're continuing to redirect the Tools Group focus in our design efforts, and our facility capacity, and our selling and marketing efforts, working to match the current customer preference. So that's the auto repair.
Now our Commercial & Industrial Group, or what we call C&I, serving critical industries in the most international of all our groups. And in the quarter, C&I manages the difficult challenge of balancing multiple economies that are in economic turbulence. Europe now has more than half a dozen countries in technical recession, and then China -- and the China environment, including the nearby countries, depending on it, they continue to struggle. India, on the other hand, is booming. Modi has the train running. So that's a positive in Asia amidst some very difficult economies. So that's the geographies.
Now let's focus on the sectors. Areas like aviation continue to be strong. You don't have to read the paper very long to realize there's a significant focus on aerospace production and repair, where the price for failure is high. And that arena is increasing demand for our precision torque products, and for our asset control solutions to improve safety and productivity. In addition, in that sort of critical arena, custom kits, matching a set of items to a particular task remains an important business, especially for the military, both domestically and internationally. And with that, critical industries is a substantial opportunity. And we are investing, expanding capacity, adding new products, either organically or through the acquisitions we've made over the last few years. We're fortifying our runways for growth, extending outside the garage, and we know it's paying off.
So overall, the quarter was favorable despite the headwinds. Tools Group pivoting. RS&I expanding with OEMs. C&I extending beyond the garage, solving the critical. And the OpCo OI percentage demonstrated once again the power of Snap-on's Value Creation Processes. Safety, quality, customer connection, innovation, and Rapid Continuous Improvement. Developing innovative solutions that are born out of insight and observations right in the workplace. This understanding, melded with RCI, helps Snap-on to once again hold fast in the turbulence of the day. Well, that's the macro-overview.
Now let's move to the segments. In the C&I Group, sales were $359.9 million, represented a decrease of $3.9 million or 1.1%, and that includes $6.7 million in acquisitions, acquisition-related sales, $1.4 million in unfavorable foreign currency, and an organic decline of 2.5%. It all reflects higher activity with customers in critical industries, more than offset by weakness in Asia-Pacific and in our power tools. From an earnings perspective, C&I operating income was $55.4 million. That was about the same as last year. The operating margin was 15.4%, up 10 basis points, and that was despite 30 basis points of headwind from currency and the acquisitions.
Within the quarter, the demand for custom kits addressing particular critical tasks remain nicely robust, with increased demand for asset control solutions like our Automatic Tool Control products. It was a nice bright spot in C&I. On the other hand, power tools was down in the quarter, but help is on the way. Two new power tool models, born out of customer connection, were recently introduced, each fulfilling specific needs for each fulfilling specific needs.
For repair garages, we launched the PH3045B air hammer. This is a tool that replicates the effect of swinging a hammer and hitting a chisel, except the device hurls the hammer 3,500 times a minute. Vehicles are filled with components like ball joints, wheel bearings, suspension bushings that are packed in tight fits for maximum efficiency. Disassembly can be a bear. We know this from being in the garage. Well, with our new air hammer, the easy-to-use retainer securely holds the chisel in place while the piston sledgehammers away.
It's powerful, but at the same time, the compact two-inch barrel enables the access in tight spaces, delivering tremendous power, speed, and energy with unlimited run time. It's a real productivity enhancer, but the essential feature, born out of watching the technicians in the shop, is the best-in-class vibration reduction created by special elastomer shocks, allowing the mechanic to pound away at seized suspension components without fatigue or pain. No more sore arms from hammer work. The new hammer was introduced late in the quarter, and techs have already noticed.
Also in power tools, our cordless portfolio expanded with the introduction of a new 18-volt nibbler designed for collision repair and metal fabrication. It's a big time-saver. It speeds up work that, once involved hand shears or other devices, helps technicians cut any free-form shape conceivable out of tough sheet metal. Again, the design resulted from customer connection, from watching the tech struggle with shears. Our new nibbler makes a big difference when cutting into fenders, extracting a damaged panel, or cutting a ceiling of a car, accommodating installation of a sunroof, or creating a place anywhere in the vehicle for placing emergency lighting, shining the way for first responders.
I have to tell you, we're encouraged by these innovative new products, and by all the others we're planning to introduce as the days go forward. We know work, and they all will make a difference right away. C&I, a quarter confronted with international headwinds, strong momentum in domestic markets, led by critical industries extending out of the garage with growing strength.
Now, let's talk about the Tools Group. The first quarter for the Tools Group was below our standard. However, we do remain confident, and we do see a pivot to focus on quick payback items registering a positive momentum and a movement. Sales in the quarter were $500.1 million, including -- reflected an organic decrease, including an organic decrease, or reflecting an organic decrease of 7%. The Group's operating income margin was 23.5%, down 100 basis points.
Notably, gross margin in the quarter rose 90 basis points, reaching 48.2%. You see, shorter payback items aren't shorter on profitability. During the quarter, we worked to redirect our plans, guide our franchisees to innovative solutions that drive productivity, and we kept engaging our customer connection, observing the tasks executed in the bay, and using the insights to design and deploy innovative and focused products, offerings that are dedicated to making work easier. Like two new products just engineered to address time-consuming tasks where simple repairs are made complex by limited accessibility, or by seized components that slow the work to a snail's pace. You can see it in the garage.
For instance, on General Motors 6L80 and 8L80, 90 transmissions, the valve body bolts are obstructed by the exhaust setup, making it very taxing to do this job with a standard ratchet or socket combination. We were in some of those GM garages and observed the problem firsthand. Classic customer connection. And the innovation that followed in our quarter-inch drive TORX Plus EPL10 Low-Profile Inverted Socket, that's a mouthful, that innovation was released in the first quarter, and it does make GM transmission work easier.
The new cushion design precisely maneuvers -- the new custom design precisely maneuvers between the exhaust assembly and the transmission, engaging the fastener in such a way that provides enough clearance for a ratcheting box or box and wrench or a hand ratchet to access the bolts for easy removal with no exhaust disassembly required, saving more than 45 minutes per repair. Right away, techs working on GM transmissions can complete more work with this device and make more money. They can do that right away. Quick payback.
Another example we saw -- another example of that was we saw that removing the brake caliper pins on Toyota trucks and sports utilities was very difficult. The pins on 4Runners, Tacomas, and Tundras are exposed to harsh road environments, often causing the parts to become immovable, regularly requiring like heat or excessive force to free the restrictive fasteners, and each of those methods requires time, and it raises the risk of damage to nearby components, often elevating the complexity of the repair, taking a lot more time. Watching the work, our engineers produced a unique punch-like bit that precisely aligns an air hammer with the dimensions of the pin, maximizing the extraction force without endangering the surrounding systems. Once again, simplifying the task and freeing the tech to move on to other jobs. It's another quick payback item that's now available and popular.
Finally in the quarter, we expanded our only -- the only U.S.-made locking plier lineup by releasing two new models. The LP5LN, constructed with a tapered nose, it's ideal for additional reach inside confined spaces to easily access narrow work pieces, and the new LP5WC, delivering a reliable gripping power to difficult to engage round objects like hoses. Beyond the special features of those two models, the full line offers our sub-compact six-inch plier line offers increased accessibility, because it's small, enabling techs to maneuver in crowded engine compartments and under the dash.
The designs also provide unmatched clamping forces that -- locking pliers, unmatched clamping forces that will not slip under load with the locking mechanism. The pliers also serve as a second pair of hands. You can lock them up, lock it up, holding material securely in place, freeing up the technician's hands to complete another step in the repair. And each unit -- each of those locking plier units is forged and produced on our Elkmont, Alabama plant, and they're the only locking models made in the U.S. Well, that is the Tools Group, pivoting to match the technician's current preferences and needs, wielding our customer connections, deploying solutions that improve efficiency by making tasks easier.
Now RS&I. The RS&I Group's results confirmed, I think, what we've been saying all along. Snap-on is well-positioned to support repair shops, both dealers and the vast networks of independent shops. And in that regard, RS&I sales in the quarter were $463.8 million, up $17.2 million or 3.9% versus last year, with an organic sales increase of 3.3%. Operating earnings for the Group reached $112.9 million, reflecting an increase of $8.3 million or 7.9% versus last year. The operating income margin was 24.3%, rising by 90 basis points. A powerful performance driven by OEM-related activity and sales in undercar.
Helping shops prepare for new technologies -- in terms of OEM-related activity and sales in undercar, helping shops prepare for new technologies and enabling system upgrades in the growing collision market. We continue to seek -- to clearly see abundant runways for growth in RS&I and we're working to take advantage. One example of that is the launch of our new heavy-duty repair information software.
This package combines the vehicle interface capabilities of our NEXIQ heavy-duty diagnostic units with the horsepower of our Mitchell 1 information database. It's an innovative solution for repair and heavy-duty industry, which, over the past decade, has seen an explosion of new technologies relating to sophisticated emission control, along with advanced computer and electrical networks that all combines to present heavy mechanics with complex and complicated repair tasks.
Now the solutions all located in one spot. Techs can search by VIN number and access operating specification, troubleshooting tips, and interactive wiring diagrams, all big -- specific to the particular vehicle, all big time savers. Then the existing product was deployed in the quarter and it's a groundbreaking integrated platform that combines diagnostic capability together with vehicle information. It's very powerful. And I can tell you, the heavy-duty industry has noticed. You can see it in the RS&I numbers.
And in the quarter, our Diagnostic division also released its latest 24.2 software upgrade, expanding our broad range of vehicle coverage and test procedures throughout all our existing hardware. The new upgrade strengthens our already market-leading data positions. Technicians get access to our SureTrack vehicle-specific real fixes, repair tips, and commonly replaced parts, all derived from our proprietary database of 2.7 billion repair actions and 355 billion data records. Unmatched insight, not only to interpret what the vehicle trouble codes are saying, but to uniquely use the information to determine the exact problem.
Analyzing millions of data lines per car, predicting the most likely repair. Snap-on uniquely provides this capability, and in its latest update, we continue adding new models and functionalities, making our proprietary software position even more effective and more powerful. We're confident in the strength of RS&I, and we keep driving to expand its positions with repair shop owners and managers by making work easier with more and more great new products.
Well, that's Snap-on's first quarter. Sales flat. Overcoming the significant headwinds. Critical industries advancing, again. The Tools Group pivoting, matching the preference for quick payback products. OEM undercar, repair information markets remaining robust. The OpCo OI margin 22.9%, up 90 basis points, and an EPS of $4.91. Strong results that overcame the headwinds and benefited from a legal outcome, all demonstrating the strength in the midst of turbulence. It was an encouraging quarter.
Now I'll turn the call over to Aldo. Aldo?
