Snap-on Announces Fourth Quarter and Full Year 2015 Results
Diluted EPS of $2.22 for the quarter increases 12.7%;
Operating earnings before financial services of 19.1% of sales in the quarter up 220 basis points;
Organic sales increase 3.1% in the quarter
KENOSHA, Wis. - February 04, 2016 - (BUSINESS WIRE) - 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 2015 operating results for the fourth quarter and full year.
- Sales of $851.7 million in the quarter decreased $5.7 million, or 0.7%, from 2014 levels; excluding $33.2 million of unfavorable foreign currency translation and $2.2 million of acquisition-related sales, organic sales increased $25.3 million or 3.1%.
- Operating earnings before financial services of $162.3 million in the quarter improved 220 basis points to 19.1% of sales as compared to $145.2 million, or 16.9% of sales, last year.
- Financial services operating earnings of $45.0 million in the quarter increased $2.8 million, or 6.6%, from 2014 levels; financial services revenue of $63.1 million in the quarter increased 6.2% from 2014 levels.
- Consolidated operating earnings of $207.3 million in the quarter improved to 22.7% of revenues (net sales plus financial services revenue) as compared to $187.4 million, or 20.4% of revenues, last year.
- The fourth quarter effective income tax rate was 31.1% in 2015 and 32.1% in 2014. For the full year, the effective income tax rate of 31.7% compared to 32.1% last year.
- Fourth quarter net earnings of $131.4 million, or $2.22 per diluted share, compared to net earnings of $116.2 million, or $1.97 per diluted share, a year ago.
- Full year sales of $3,352.8 million increased 2.3% from 2014 levels; excluding $157.7 million of unfavorable foreign currency translation and $12.0 million of acquisition-related sales, organic sales increased 7.1%. Full year net earnings of $478.7 million, or $8.10 per diluted share, compared to net earnings of $421.9 million, or $7.14 per diluted share, last year.
“For full-year 2015, Snap-on achieved organic sales growth of 7.1% and diluted earnings per share increased 13.4%, once again validating Snap-on’s ability to build upon its unique combination of capabilities in serving serious professionals and to successfully navigate our runways for coherent growth and operating improvement,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “Our fourth quarter results, including 3.1% organic sales growth, a 19.1% operating margin before financial services, and a 12.7% increase in diluted earnings per share, represent an encouraging finish to 2015 and demonstrate ongoing progress along these runways while overcoming meaningful and continuing external headwinds. As we enter 2016, we believe that we’ll further strengthen our position with professionals performing critical tasks by enhancing the franchise network, expanding in the vehicle repair garage, extending to critical industries and building in emerging markets. At the same time, we remain committed to taking advantage of the opportunities for ongoing operating improvement through our Snap-on Value Creation Processes in the areas of safety, quality, customer connection and rapid continuous improvement. Finally, our progress in 2015 would not have been possible without the capability and commitment of our franchisees and associates, and I thank them for their dedication and their contributions.”
Quarterly Segment Results
Commercial & Industrial Group segment sales of $281.8 million in the quarter decreased $16.4 million, or 5.5%, from 2014 levels. Excluding $14.7 million of unfavorable foreign currency translation, organic sales declined $1.7 million, or 0.6%, as lower sales to the military and to customers in the oil and gas sector were partially offset by sales gains from both the segment’s power tools operations and European-based hand tools business.
Operating earnings of $41.9 million in the period, including $1.5 million of unfavorable foreign currency effects, increased $1.4 million from 2014 levels, and the operating margin (operating earnings as a percentage of segment sales) of 14.9% improved 130 basis points from 13.6% a year ago.
Snap-on Tools Group segment sales of $411.2 million in the quarter rose $23.7 million, or 6.1%, from 2014 levels, reflecting sales increases in both the company’s U.S. and international franchise operations. Excluding $9.3 million of unfavorable foreign currency translation, organic sales increased 8.7%.
Operating earnings of $71.9 million in the period, including $4.8 million of unfavorable foreign currency effects, increased $8.0 million from 2014 levels, and the operating margin of 17.5% improved 100 basis points from 16.5% a year ago.
Repair Systems & Information Group segment sales of $280.6 million in the quarter decreased $2.2 million, or 0.8%, from 2014 levels. Excluding $10.3 million of unfavorable foreign currency translation and $2.2 million of acquisition-related sales, organic sales increased $5.9 million, or 2.2%, primarily due to higher sales of diagnostics and repair information products to independent repair shop owners and managers, and increased sales to OEM dealerships; sales of undercar equipment were essentially flat year over year.
Operating earnings of $72.1 million in the period, including $2.9 million of unfavorable foreign currency effects, increased $6.9 million from 2014 levels, and the operating margin of 25.7% improved 260 basis points from 23.1% a year ago.
Financial Services operating earnings of $45.0 million on revenue of $63.1 million in the quarter compared to operating earnings of $42.2 million on revenue of $59.4 million a year ago.
Corporate expenses of $23.6 million in the quarter compared to expenses of $24.4 million last year.
Snap-on expects to make continued progress in 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 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 expects that capital expenditures in 2016 will be in a range of $80 million to $90 million. Snap-on also anticipates that its full year 2016 effective income tax rate will be comparable to its 2015 full year rate.
Conference Call and Webcast on February 4, 2016, at 9:00 a.m. Central Time
A discussion of this release will be webcast on Thursday, February 4, 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.
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 3, 2015, 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.
SOURCE Snap-On Inc.