KENOSHA, Wis.- (BUSINESS WIRE) - Oct. 20, 2016 - 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 third quarter of 2016.
“We believe Snap-on’s third quarter results, including a 12.1% increase in diluted earnings per share and continued growth in organic sales, confirm our success in serving serious professionals performing critical tasks and in leveraging our Snap-on Value Creation Processes,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “The 140 basis point improvement in operating margin before financial services reflects our ability to drive ongoing improvements in safety, quality, customer connection and rapid continuous improvement. In the third quarter, we again received recognition for several of our new products with awards from both MOTOR Magazine and Professional Tool & Equipment News, providing further evidence of the winning innovation that results from actively connecting with customers and furthering our deep understanding of their work. 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.”
Commercial & Industrial Group segment sales of $289.3 million in the quarter increased $0.8 million, or 0.3%, from 2015 levels. Excluding $3.5 million of unfavorable foreign currency translation, organic sales increased $4.3 million, or 1.5%, primarily due to higher sales in the segment’s European-based hand tools business and in the segment’s power tools and Asia/Pacific operations; organic sales to customers in critical industries were essentially flat.
Operating earnings of $43.7 million in the period, including $0.3 million of favorable foreign currency effects, increased$2.4 million from 2015 levels, and the operating margin (operating earnings as a percentage of segment sales) of 15.1% improved 80 basis points from 14.3% a year ago.
Snap-on Tools Group segment sales of $397.2 million in the quarter rose $16.6 million, or 4.4%, from 2015 levels. Excluding $4.6 million of unfavorable foreign currency translation, organic sales were up $21.2 million, or 5.6%, reflecting similar sales increases in both the company’s U.S. and international franchise operations.
Operating earnings of $64.6 million in the period, including $3.2 million of unfavorable foreign currency effects, increased $8.3 million from 2015 levels, and the operating margin of 16.3% improved 150 basis points from 14.8% a year ago.
Repair Systems & Information Group segment sales of $286.1 million in the quarter rose $3.2 million, or 1.1%, from 2015 levels. Excluding $2.8 million of unfavorable foreign currency translation and $1.1 million of acquisition-related sales, organic sales increased $4.9 million, or 1.7%, primarily due to higher sales of diagnostic and repair information products to independent repair shop owners and managers; sales of both undercar equipment and sales to OEM dealerships were essentially flat.
Operating earnings of $71.8 million in the period, including $1.1 million of unfavorable foreign currency effects, increased $2.1 million from 2015 levels, and the operating margin of 25.1% improved 50 basis points from 24.6% a year ago.
Financial Services operating earnings of $50.6 million on revenue of $71.6 million in the quarter compared to operating earnings of $43.5 million on revenue of $61.1 million a year ago.
Corporate expenses of $22.5 million in the quarter decreased $1.2 million from $23.7 million last year, primarily due to lower pension expense.
Snap-on expects to make continued progress during the balance of 2016 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 also in adjacent markets, additional geographies and other areas, including in critical industries, where the cost and penalties for failure can be high. In pursuit of these initiatives, Snap-on now anticipates that capital expenditures in 2016 will approximate $80 million, of which $56.6 million was incurred through the end of the third quarter. Snap-on presently expects that its full year 2016 effective income tax rate will be slightly below its full year 2015 rate.
A discussion of this release will be webcast on Thursday, October 20, 2016, 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.
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”), excluding 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. Snap-on has significant international operations and is subject to risks inherent with foreign operations, including foreign currency translation fluctuations. 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.
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. Products and services are sold through the company’s franchisee, company-direct, distributor and internet channels. Founded in 1920, Snap-on is a $3.4 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 may contain 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 January 2, 2016, 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.
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
SOURCE Snap-on Incorporated
Leslie Kratcoski
Snap-on Incorporated
Investor Relations
262/656-6121
Richard Secor
Media Relations
Snap-on Incorporated
262/656-5561
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.