Operating earnings before financial services improves to 14.2% of sales;
Diluted EPS of $1.30 increases 14% (excluding 2011 arbitration settlement gain);
Sales, excluding foreign currency effects, up 4.5%
KENOSHA, Wis.--(BUSINESS WIRE)--Jul. 19, 2012-- 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 2012.
"We're encouraged by our second quarter 2012 results, which we believe validate the strength of Snap-on's ability to serve 'the 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. "We believe the organic sales increase, achieved despite uncertainties surrounding the global macroeconomic environment, particularly in Europe, illustrates ongoing advancements 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. At the same time, we believe the continuing operating margin improvements are a clear reflection of our Snap-on Value Creation Processes and their positive contributions to our enterprise. Finally, I note that the second quarter results and our favorable trends are due to the dedication and efforts of our franchisees and associates worldwide; I thank them for their ongoing support and commitment."
Commercial & Industrial Group segment sales of $283.4 million in the second quarter increased $3.7 million, or 1.3%, from 2011 levels; excluding $10.1 million of unfavorable foreign currency translation, organic sales increased 5.1%.
Operating earnings of $32.8 million in the period includes $3.2 million of restructuring costs, primarily to improve the segment's cost structure in Europe; operating earnings of $29.2 million last year included $0.5 million of restructuring costs. As a percentage of sales, operating earnings of 11.6% in the quarter increased 120 basis points (100 basis points equals 1.0 percent) from 10.4% a year ago, despite a 90 basis point impact from the higher restructuring costs.
Snap-on Tools Group segment sales of $325.0 million in the second quarter rose $26.0 million, or 8.7%, from 2011 levels; excluding $3.5 million of unfavorable foreign currency translation, organic sales increased 10.0%.
Operating earnings of $44.5 million in the period includes $6.9 million of restructuring costs, largely for a pension plan settlement related to a 2011 facility closure; operating earnings of $46.2 million last year included $0.8 million of restructuring costs. As a percentage of sales, operating earnings of 13.7% in the quarter decreased 180 basis points from 15.5% a year ago, including a 190 basis point impact from the higher restructuring costs.
Repair Systems & Information Group segment sales of $227.4 million in the second quarter decreased $7.1 million, or 3.0%, from 2011 levels; excluding $7.5 million of unfavorable foreign currency translation, organic sales rose 0.2%.
Operating earnings of $52.2 million in the period increased $3.2 million from 2011 levels. As a percentage of sales, operating earnings of 23.0% in the quarter compared with 20.9% a year ago.
Financial Services operating earnings were $25.6 million on $39.9 million of revenue in the second quarter of 2012, as compared to operating earnings of $17.5 million (excluding the $18.0 million arbitration settlement gain) on $30.3 million of revenue a year ago.
Corporate expenses were $24.9 million and $25.6 million in the second quarters of 2012 and 2011, respectively.
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 now anticipates that capital expenditures in 2012 will be in a range of $70 million to $80 million, of which $39.8 million was spent in the first six months of 2012. Snap-on also anticipates that its full year 2012 effective income tax rate will approximate 33.5%.
Snap-on is including certain non-GAAP supplemental information as part of this release. The non-GAAP information excludes the effects of last year's $18.0 million arbitration settlement gain in the second quarter of 2011 as management believes that the non-GAAP measures provide a more meaningful comparison of the company's year-over-year operating performance. For information on the non-GAAP measures, see the attached "Reconciliation of non-GAAP Financial Measures" schedule included with this release.
A discussion of this release will be webcast on Thursday, July 19, 2012, 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 www.snapon.com/sna and click on the link toward the bottom of the page. Additional detail about Snap-on is also available on the Snap-on web site.
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, aerospace, agriculture, construction, government and military, mining, natural resources and power generation. Products and services are sold through the company's franchisee, company-direct, distributor and internet channels. Founded in 1920, Snap-on is a $2.9 billion, S&P 500 company headquartered in Kenosha, Wisconsin.
Statements in this news release that are not historical facts, including statements that (i) are in the future tense; (ii) include the words "expects," "anticipates," "intends," "approximates," or similar words that reference Snap-on or its management; (iii) are specifically identified as forward-looking; or (iv) describe Snap-on's or management's future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Snap-on cautions the reader that this news release contains statements, including earnings projections, that are forward-looking in nature and were developed by management in good faith and, accordingly, are subject to risks and uncertainties regarding Snap-on's expected results that could cause (and in some cases have caused) actual results to differ materially from those described or contemplated in any forward-looking statement. Factors that may cause the company's actual results to differ materially from those contained in the forward-looking statements include those found in the company's reports filed with the Securities and Exchange Commission, including the information under the "Safe Harbor" and "Risk Factors" headings in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which are incorporated herein by reference. Snap-on disclaims any responsibility to update any forward-looking statement provided in this news release, except as required by law.
For additional information, please visit www.snapon.com.
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Snap-on is providing the above reconciliations of non-GAAP financial measures (excluding last year's $18.0 million pretax arbitration settlement gain recorded in the second quarter of 2011) as management believes that these non-GAAP measures provide a more meaningful comparison of the company's year-over-year operating performance.
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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.