Snap-On Inc. reports 2.1 percent sales gain in third quarter

Snap-on Inc., a global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks, announced operating results for the third quarter of 2012.
• Sales of $711.6 million increased $14.4 million, or 2.1 percent, from 2011 levels; excluding $16.6 million of unfavorable foreign currency translation, organic sales increased 4.6 percent.
• Operating earnings before financial services of $96.2 million, including $12.2 million of higher year-over-year stock-based, mark-to-market expense, compares to $94.3 million last year.
• Financial services operating earnings of $27.9 million increased $7.1 million from 2011 levels, reflecting the growth of the on-book finance portfolio.
• Consolidated operating earnings of $124.1 million improved to 16.5 percent of revenues (net sales plus financial services revenue) as compared to $115.1 million, or 15.8 percent of revenues, last year.
• Net earnings of $74.1 million, or $1.26 per diluted share, compares with net earnings of $67.8 million, or $1.16 per diluted share, last year.
“We believe our third quarter results demonstrate continued progress along our defined runways for coherent growth: enhancing the franchise network, expanding in the vehicle repair garage, extending into critical industries and building in emerging markets,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “These results also underscore the way in which our commitment to the Snap-on Value Creation processes drives ongoing improvement in safety, quality, customer connection, innovation and rapid continuous improvement. As further evidence of our success in connecting with customers and translating that insight into winning innovation, we are honored to have been recognized again in 2012 by both MOTOR Magazine and Professional Tool & Equipment News with multiple awards for Snap-on products in each publication. Finally, these results and achievements reflect significant effort and dedication across the organization and I thank our franchisees and associates worldwide for their extraordinary contributions and commitment.”
Commercial and industrial group segment sales of $280.4 million in the third quarter increased $2.1 million, or 0.8 percent, from 2011 levels; excluding $8.8 million of unfavorable foreign currency translation, organic sales increased 4.0 percent.
Operating earnings of $33.4 million in the period increased $3.8 million, or 12.8 percent, from 2011 levels and the operating margin (operating earnings as a percentage of segment sales) of 11.9 percent increased from 10.6 percent a year ago.
Snap-on tools group segment sales of $308.8 million in the third quarter rose $29.2 million, or 10.4 percent, from 2011 levels; excluding $1.6 million of unfavorable foreign currency translation, organic sales increased 11.1 percent.
Operating earnings of $40.2 million in the period increased $4.6 million, or 12.9 percent, from 2011 levels and the operating margin of 13.0 percent improved from 12.7 percent a year ago.
Repair systems and information group segment sales of $222.0 million in the third quarter decreased $0.6 million from 2011 levels; excluding $6.5 million of unfavorable foreign currency translation, organic sales rose 2.7 percent.
Operating earnings of $49.5 million in the period increased $5.8 million from 2011 levels and the operating margin of 22.3 percent increased from 19.6 percent a year ago.
Financial services operating earnings were $27.9 million on $40.5 million of revenue in the third quarter of 2012, as compared to operating earnings of $20.8 million on $32.7 million of revenue a year ago.
Corporate expenses of $26.9 million increased $12.3 million from prior-year levels primarily due to $12.2 million of higher stock-based (mark-to-market) expense. As a result of changes in the company’s quarter-end stock price, operating expenses in the third quarter of 2012 included $4.4 million of mark-to-market expense, while operating expenses in the third quarter of 2011 were partially offset by $7.8 million of mark-to-market benefit.
Snap-on expects to continue with its planned strategic investments to enhance its mobile tool distribution network, expand in the vehicle repair garage, extend to critical industries and build in emerging markets. As a result of these initiatives, Snap-on anticipates that capital expenditures in 2012 will be in a range of $75 million to $80 million, of which $59.5 million was spent in the first nine months of 2012. Snap-on anticipates that its full year 2012 effective income tax rate will approximate 33.2 percent.