Actionable news
0
All posts from Actionable news
Actionable news in SNA: SNAP-ON INCORPORATED,

Snap-on Announces Second Quarter 2017 Results

KENOSHA, Wis.--(BUSINESS WIRE)--Snap-on Incorporated (NYSE: SNA), a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks, today announced operating results for the second quarter of 2017.

“We believe diluted earnings per share growth of 10.2% and a net sales increase of 5.6%, including an organic sales rise of 2.7%, represent encouraging results for the second quarter and confirm our success in serving serious professionals performing critical tasks”

Tweet this
  • Net sales of $921.4 million increased $49.1 million, or 5.6%, from 2016 levels, reflecting a $23.2 million, or 2.7%, organic sales gain and $38.4 million of acquisition-related sales, partially offset by $12.5 million of unfavorable foreign currency translation. (See “Non-GAAP Measures” below for a definition of, and further explanation about, organic sales.)
  • Operating earnings before financial services of $183.7 million improved 80 basis points to 19.9% of sales as compared to $166.4 million, or 19.1% of sales, last year.
  • Financial services revenue of $77.7 million increased $8.4 million from 2016 levels; financial services operating earnings of $54.6 million increased from $49.5 million last year.
  • Consolidated operating earnings of $238.3 million improved 100 basis points to 23.9% of revenues (net sales plus financial services revenue) as compared to $215.9 million, or 22.9% of revenues, last year.
  • The second quarter effective income tax rate was 30.6% in 2017 and 31.0% in 2016.
  • Net earnings of $153.2 million, or $2.60 per diluted share, compared to net earnings of $140.1 million, or $2.36 per diluted share, a year ago.

“We believe diluted earnings per share growth of 10.2% and a net sales increase of 5.6%, including an organic sales rise of 2.7%, represent encouraging results for the second quarter and confirm our success in serving serious professionals performing critical tasks,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “Our year-over-year improvement in operating margin before financial services reflects ongoing progress through our Snap-on Value Creation Processes. At the same time, these results also demonstrate continued advancement along our strategic runways for growth, as indicated by the notable increase in activity in the quarter. Despite some sales headwinds in the quarter for the Snap-on Tools Group, we believe the vehicle repair markets in which we operate remain robust and afford significant ongoing opportunity. Furthermore, our acquisition of Norbar Torque Tools in the second quarter adds to our expanding product offering to customers in critical industries. Finally, these results would not have been possible without the dedication and capability of our franchisees and associates worldwide; I thank them for their extraordinary commitment and ongoing contributions.”

Segment Results

Commercial & Industrial Group segment sales of $310.0 million in the quarter increased $24.3 million, or 8.5%, from 2016 levels, reflecting a $13.3 million, or 4.7%, organic sales gain, $15.9 million of acquisition-related sales, and $4.9 million of unfavorable foreign currency translation. The organic sales increase primarily includes gains in the segment’s European-based hand tools business and higher sales to customers in critical industries.

Operating earnings of $42.7 million in the period increased $3.4 million from 2016 levels, and the operating margin (operating earnings as a percentage of segment sales) was 13.8% in both periods.

Snap-on Tools Group segment sales of $413.8 million in the quarter decreased $2.9 million, or 0.7%, from 2016 levels, reflecting a $2.1 million, or 0.5%, organic sales gain and $5.0 million of unfavorable foreign currency translation.

Operating earnings of $80.6 million in the period, including $3.2 million of unfavorable foreign currency effects, increased $4.3 million from 2016 levels, and the operating margin of 19.5% improved 120 basis points from 18.3% a year ago.

Repair Systems & Information Group segment sales of $338.1 million in the quarter increased $42.9 million, or 14.5%, from 2016 levels, reflecting a $24.1 million, or 8.3%, organic sales gain, $22.5 million of acquisition-related sales and $3.7 million of unfavorable foreign currency translation. The organic sales gain includes higher sales of diagnostics and repair information products to independent repair shop owners and managers, increased sales to OEM dealerships, and higher sales of undercar equipment.

Operating earnings of $81.9 million in the period, including $1.2 million of unfavorable foreign currency effects, increased $7.4 million from 2016 levels, and the operating margin of 24.2% compared to 25.2% a year ago.

Financial Services operating earnings of $54.6 million on revenue of $77.7 million in the quarter compared to operating earnings of $49.5 million on revenue of $69.3 million a year ago. Originations of $270.6 million in the second quarter decreased $10.4 million, or 3.7%, from 2016 levels.

Corporate expenses of $21.5 million in the quarter compared to $23.7 million last year, primarily due to lower pension expense.

Outlook

Snap-on expects to make continued progress in 2017 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, Snap-on expects that capital expenditures in 2017 will be in a range of $80 million to $90 million, of which $34.4 million was expended in the first six months of the year. Snap-on also anticipates that its full year 2017 effective income tax rate will be comparable to its 2016 full year rate.

Conference Call and Webcast on July 20, 2017, at 9:00 a.m. Central Time

A discussion of this release will be webcast on Thursday, July 20, 2017, at 9:00 a.m. Central Time, and a replay will be available for at least 10 days following the call. To access the webcast, visit http://www.snapon.com/sna and click on the link to the webcast. The slide presentation accompanying the call can be accessed under the Downloads tab in the webcast viewer, as well as on the Snap-on website under the tabs Investor Information / Investor Events / Company Presentations.

Non-GAAP Measures

References in this document to “organic sales” refer to sales from continuing operations calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), adjusted to exclude acquisition-related sales and the impact of foreign currency translation. Management evaluates the company’s sales performance based on organic sales growth, which primarily reflects growth from the company’s existing businesses as a result of increased output, customer base and geographic expansion, new product development and/or pricing, and excludes sales contributions from acquired operations the company did not own as of the comparable prior-year reporting period. The company’s organic sales disclosures also exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends. Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying growth trends in our businesses and facilitating comparisons of our sales performance with prior periods.

About Snap-on

Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, including aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education. Snap-on also derives income from various financing programs to facilitate the sales of its products and support its franchise business. Products and...


More