Snap-on Inc. announced operating results for the first quarter of 2013.
Sales of $741.7 million increased $6.5 million, or 0.9 percent, from 2012 levels; excluding $4.3 million of unfavorable foreign currency translation, organic sales increased 1.5 percent. Operating earnings before financial services of $107.8 million improved to 14.5 percent of sales as compared to $97.5 million, or 13.3 percent of sales, last year.
Financial services operating earnings of $30.5 million increased $6.6 million from 2012 levels. Consolidated operating earnings of $138.3 million improved to 17.6 percent of revenues (net sales plus financial services revenue) as compared to $121.4 million, or 15.7 percent of revenues, last year.Net earnings of $82.8 million, or $1.40 per diluted share, compares with net earnings of $71.0 million, or $1.21 per diluted share, a year ago.
"We're encouraged with our first quarter performance, which included a significant improvement in operating margin and a 15.7 percent increase in diluted earnings per share, despite continuing headwinds that are impacting specific areas of our business," said Nick Pinchuk, Snap-on chairman and chief executive officer. "We're focused on our Snap-on value creation processes and are committed to our decisive strategic initiatives...enhancing the van network...expanding with repair shop owners and managers...extending to critical industries...and building in emerging markets. We believe it's that effective balance which, once again, has enabled progress along our runways for growth and improvement, and has authored the positive performance evident in the first quarter results. I thank our franchisees and associates for their ongoing contributions. Without their capability, energy and dedication, these results would not have been possible."
Commercial and industrial group segment sales of $266.4 million in the quarter decreased $20.1 million, or 7.0 percent, from 2012 levels primarily due to lower sales to the military and in the segment's European-based hand tools business as a result of ongoing economic weakness in that region. Excluding $2.2 million of unfavorable foreign currency translation, organic sales in the quarter decreased 6.3%.
Operating earnings of $30.6 million in the period increased $1.4 million, or 4.8 percent, from 2012 levels, and the operating margin (operating earnings as a percentage of segment sales) of 11.5 percent improved from 10.2 percent a year ago.
Snap-on tools group segment sales of $327.3 million in the quarter rose $10.7 million, or 3.4 percent, from 2012 levels, reflecting sales gains across both the company's U.S. and international franchise operations. Excluding $0.9 million of unfavorable foreign currency translation, organic sales increased 3.7 percent.
Operating earnings of $47.2 million in the period increased $1.1 million, or 2.4 percent, from 2012 levels and the operating margin of 14.4 percent compared with 14.6 percent a year ago.
Repair systems and information group segment sales of $246.1 million in the quarter increased $20.0 million, or 8.8 percent, from 2012 levels primarily due to higher sales to original equipment manufacturer (OEM) dealerships and gains in sales of diagnostics and repair information products to repair shop owners and managers. Excluding $1.0 million of unfavorable foreign currency translation, organic sales in the quarter rose 9.3 percent.
Operating earnings of $56.5 million in the period increased $7.9 million, or 16.3 percent, from 2012 levels and the operating margin of 23.0% increased from 21.5 percent a year ago.
Financial Services operating earnings of $30.5 million on revenue of $44.0 million in the quarter compared with operating earnings of $23.9 million on revenue of $38.0 million a year ago.
Corporate expenses of $26.5 million in the quarter compared with $26.4 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 continues to anticipate that capital expenditures in 2013 will be in a range of $70 million to $80 million. Snap-on also expects that its full year 2013 effective income tax rate will be comparable to its 2012 rate.
