Snap-on Inc., a manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks, announced operating results for the second quarter of 2013.
- Sales of $764.1 million increased $26.2 million, or 3.6 percent, from 2012 levels; excluding $4.7 million of unfavorable foreign currency translation and $8.5 million of sales from the previously announced May 2013 acquisition of Challenger Lifts, Inc., organic sales increased 3.1 percent.
- Operating earnings before financial services of $117.8 million, or 15.4 percent of sales, compares with $104.6 million, or 14.2 percent of sales, last year.
- Restructuring costs totaled $1.8 million in the quarter; restructuring costs of $10.2 million in the second quarter of 2012 included $6.8 million for the settlement of a pension plan. Stock-based and mark-to-market expenses in the quarter increased $4.4 million from 2012 levels.
- Financial services operating earnings of $30.6 million increased $5.0 million from 2012 levels.
- Consolidated operating earnings of $148.4 million improved to 18.4 percent of revenues (net sales plus financial services revenue) as compared to $130.2 million, or 16.7 percent of revenues, last year.
- Net earnings of $88.4 million, or $1.50 per diluted share, compares with net earnings of $76.4 million, or $1.30 per diluted share, a year ago.
"We believe our performance in the second quarter reaffirms Snap-on's strengths in serving serious professionals performing critical repairs around the world every day," said Nick Pinchuk, Snap-on chairman and chief executive officer. "Again this quarter, we achieved higher year-over-year sales and increased operating income in spite of ongoing headwinds in specific parts of our business, and we continued to progress in those strategic areas of importance that we've identified as being decisive to our future. For example, our recent acquisition of Challenger Lifts in the second quarter broadens our established capabilities and furthers our advancement along the growth runway of expanding with repair shop owners and managers. Finally, I thank our franchisees and associates worldwide for their significant dedication and contributions, without which these results would not have been possible."
Commercial and industrial group segment sales of $266.2 million in the quarter decreased $17.2 million, or 6.1 percent, from 2012 levels primarily due to lower sales to the military and in the segment's European-based hand tools business. Excluding $2.1 million of unfavorable foreign currency translation, organic sales in the quarter decreased 5.4 percent.
Operating earnings of $33.6 million in the period increased $0.8 million from 2012 levels, and the operating margin (operating earnings as a percentage of segment sales) of 12.6 percent improved from 11.6 percent a year ago.
Snap-on tools group segment sales of $346.2 million in the quarter rose $21.2 million, or 6.5 percent, from 2012 levels, reflecting sales gains across both the company's U.S. and international franchise operations.
Excluding $1.5 million of unfavorable foreign currency translation, organic sales increased 7.0 percent.
Operating earnings of $54.5 million in the period increased $10.0 million from 2012 levels and the operating margin of 15.7 percent compared with 13.7 percent a year ago. Operating earnings in 2013 includes $0.2 million of restructuring costs; operating earnings in the second quarter of 2012 included $6.9 million of restructuring costs largely for a pension plan settlement. Operating earnings in 2013 also includes $1.8 million of higher stock-based and mark-to-market expenses associated with the company's franchisee stock purchase plan.
Repair systems and information group segment sales of $246.2 million in the quarter increased $18.8 million, or 8.3 percent, from 2012 levels. Excluding $8.5 million of sales from the Challenger acquisition and $0.8 million of unfavorable foreign currency translation, organic sales in the quarter rose 4.9 percent, primarily due to higher sales to original equipment manufacturer (OEM) dealerships and gains in sales of diagnostics and repair information products to independent repair shop owners and managers.
Operating earnings of $56.7 million in the period increased $4.5 million from 2012 levels; the operating margin was 23.0 percent in both the second quarters of 2013 and 2012.
Financial services operating earnings of $30.6 million on revenue of $44.5 million in the quarter compared with operating earnings of $25.6 million on revenue of $39.9 million a year ago.
Corporate expenses of $27.0 million in the quarter increased from $24.9 million last year, primarily due to $2.6 million of higher stock-based and mark-to-market expenses.
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.
