Snap-on Outperforms Estimate

Zacks

Snap-on Incorporated (SNA) announced fourth-quarter 2012 results before the market opened today, reporting earnings per share of $1.43, above the Zacks Consensus Estimate of $1.37 and the prior-year quarter’s earnings of $1.27.

Earnings per share for full year 2012 are $5.20, above the Zacks Consensus Estimate of $5.14 and the prior year quarter earnings of $4.52. The company’s good results show its strength in its sector.

Total Revenue

Total revenue in the quarter increased by 2.3% year over year to $753.2 million. Organically the sales increased by 2.5%. For full year 2012, total revenue was $2.94 billion, up 2.9% year over year.

Segment Results

Commercial & Industrial Group segment sales of $275.6 million in the quarter, down 6.7% year over year. Decline in revenue from military as well as from European-based hand tools business accounted for the decrease in sales. Snap-on Tools Group segment sales were $321.6 million, up 9.8% led by SNA’s U.S. and international franchise operations.  Repair Systems & Information Group segment sales were $241.6 million in the quarter, up 2.2%.

Income and Expenses         

Operating earnings for the quarter were $140.7 million compared with $125.9 million in the prior-year quarter. Operating expenses were $240.6 million compared with $232.0 million.

Balance Sheet

Cash and Cash equivalents were $214.5 million at the end of the quarter with long-term debt of $970.4 million and shareholders equity of $1.82 billion compared with $185.6 million, $967.9 million and $1.55 billion, respectively.

Outlook

Snap-on expects to incur capital expenditures of $70 million to $80 million in 2013. The company noted that it will continue its focus on emerging markets, expand its presence in new industries, enhance its mobile tool distribution network and expand in the vehicle repair garage. 

The biggest advantage of Snap-on is its ability to innovate and it has been doing so over the last 90 years. Snap-On has invested in new products and increased brand awareness. The company has managed to create product excitement and real customer value through a combination of innovation and customer connection processes.

However, the European financial crisis, uncertainty about the U.S. fiscal cliff on January 1, 2013, and the slowing   Chinese economy, collectively contribute to a tenuous global business environment. These macro conditions provide limited visibility into the company’s future performance.

Snap-on Incorporated is a global provider of professional tools, equipment, and related solutions for technicians, vehicle service centers, original equipment manufacturers (OEMs), and other industrial users. Products include a broad range of professional hand and power tools; tool storage; vehicle diagnostics and service equipment; business management systems; equipment repair services; and other tool and equipment solutions.

Snap-on currently has a Zacks #3 Rank (Hold). Its close rivals such as Interdigital Inc. (IDCC), Juniper Networks (JNPR) and Clean Energy Fuels Inc. (CLNE) all have a Zacks Rank #2 (Buy).

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