Snap-on Inc.

Snap-on Inc. reports 2.3 percent quarterly sales gain

Snap-on Inc. announced 2012 operating results for the fourth quarter and full year.
• Sales of $753.2 million in the quarter increased $16.6 million, or 2.3 percent, from 2011 levels; excluding $1.9 million of unfavorable foreign currency translation, organic sales increased 2.5 percent.
• Operating earnings before financial services of $111.4 million in the quarter improved to 14.8 percent of sales as compared to $103.8 million, or 14.1 percent of sales, last year.
• Financial services operating earnings of $29.3 million in the quarter increased $7.2 million from 2011 levels, reflecting the growth of the on-book finance portfolio.
• Consolidated operating earnings of $140.7 million in the quarter improved to 17.7 percent of revenues (net sales plus financial services revenue) as compared to $125.9 million, or 16.3 percent of revenues, last year.
• Net earnings of $84.6 million, or $1.43 per diluted share, for the quarter compares with net earnings of $74.3 million, or $1.27 per diluted share, a year ago.
• Full year 2012 sales of $2.94 billion increased 2.9 percent from 2011 levels; excluding $46.0 million of unfavorable foreign currency translation, organic sales increased 4.6 percent. Full year 2012 net earnings of $306.1 million, or $5.20 per diluted share, compares with 2011 net earnings of $265.2 million, or $4.52 per diluted share, excluding last year’s $18.0 million pretax ($11.1 million after tax, or $0.19 per diluted share) arbitration settlement gain. Net earnings for the full year 2011, including the arbitration settlement gain, were $276.3 million or $4.71 per diluted share.
“We believe our performance in the fourth quarter of 2012 further confirms Snap-on’s strengths in making work easier for serious professionals performing critical tasks, where the costs and penalties for failure can be high,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “In the fourth quarter and throughout 2012, we continued to progress in those strategic areas of importance that we’ve identified as being decisive to our future, while achieving higher year-over-year sales and operating income despite ongoing macroeconomic and political headwinds impacting specific parts of our business.

"As we move forward in 2013, we believe we will make continued advancements along our coherent runways for growth and achieve further improvements from our Snap-on value creation processes. Finally, our progress in 2012 would not have been possible without the tremendous contributions and efforts of our franchisees and associates worldwide; I thank them all for their significant commitment and extraordinary dedication.”

Commercial and industrial group segment sales of $275.6 million in the quarter decreased $19.8 million, or 6.7 percent, from 2011 levels. Excluding $1.7 million of unfavorable foreign currency translation, organic sales in the quarter decreased 6.2% year over year primarily due to lower sales to the military and in the segment’s European-based hand tools business as a result of continued economic weakness in that region.
Operating earnings of $31.9 million in the period decreased $1.1 million, or 3.3 percent, from 2011 levels, while the operating margin (operating earnings as a percentage of segment sales) of 11.6 percent increased from 11.2 percent a year ago.
Snap-on tools group segment sales of $321.6 million in the quarter rose $28.8 million, or 9.8 percent, from 2011 levels; excluding $1.4 million of favorable foreign currency translation, organic sales increased 9.3 percent, reflecting increases across both the company’s U.S. and international franchise operations.
Operating earnings of $45.6 million in the period increased $6.0 million, or 15.2 percent, from 2011 levels and the operating margin of 14.2% improved from 13.5 percent a year ago.
Repair systems and information group segment sales of $241.6 million in the quarter increased $5.1 million, or 2.2 percent, from 2011 levels; excluding $1.6 million of unfavorable foreign currency translation, organic sales rose 2.9 percent, primarily due to gains in sales of diagnostics and repair information products to repair shop owners and managers, and in sales to original equipment manufacturer (OEM) dealerships.
Operating earnings of $55.4 million in the period increased $6.2 million, or 12.6 percent, from 2011 levels and the operating margin of 22.9 percent increased from 20.8 percent a year ago.
Financial Services operating earnings of $29.3 million on revenue of $42.9 million in the quarter compared with operating earnings of $22.1 million on revenue of $35.5 million a year ago.
Corporate expenses of $21.5 million in the fourth quarter compared with $18.0 million last year.

In 2013, Snap-on expects to continue with the advancement of its strategic framework designed to enhance its mobile tool distribution network, expand in the vehicle repair garage, extend to critical industries and build in emerging markets. In pursuit of these initiatives, Snap-on anticipates that capital expenditures in 2013 will be in a range of $70 million to $80 million. Snap-on expects that its full year 2013 effective income tax rate will be comparable to its 2012 rate.

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