Key Takeaways From Snap-on's 1st-Quarter Results
- By Mayank Marwah
Snap-on Inc. (SNA) released its first-quarter financial results before the market opened on April 18 . While the tool and equipment manufacturer posted softer sales, its earnings edged past projections.
By the numbers
The company recorded GAAP earnings of $3.16 per share, a 12.1% gain year over year. Quarterly revenue declined 1.5% to $921.7 million due to unfavorable foreign currency exhange rates.
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Snap-on saw lopsided sales growth across its business segments. The tools group generated $410.2 million in sales, an increase of $5.5 million. On the other hand, the repair systems and information group saw sales decrease by $9 mllion from the year-ago quarter to $327.9 million.
Regardless, the company witnessed 1.4% organic sales growth. Adjusted operating income grew 1.4% to $237.9 million, while the adjusted operating margin increased 60 basis points to 23.6%.
In a statement, CEO Nick Pinchuk commented on the company's performance:
"We are encouraged by our first quarter 2019 results, which included a continuing recovery in our U.S. franchise network, with a mid single-digit sales gain in that operation," he said.
At the end of the first quarter, Snap-on's balance of cash and cash equivalents amounted to $156.4 million. Long-term debt was $946.7 million.
Segment performance
The Commercial and Industrial Group's sales totaled $322.5 million, down 2.7% year over year. Organic sales rose 1.5%, which indicated strong growth in the specialty tools business as well as robust sales to critical industries. This improvement was only partially offset by declining sales in the Asia-Pacific region.
The tools business saw sales growth of 1.4% to $410.2 million. That also included organic sales growth of 2.9%, which was attributable to rising sales in the U.S. franchise business, only partially offset by a decline in overseas operations.
Revenue of $327.9 million for the Repair Systems & Information Group was down 2.7% on currency headwinds. Due to poor sales of undercar equipment, the segment's organic sales dipped 0.5%, though it saw increased sales to original equipment manufaturers.
Looking forward
Apart from expanding its customer base, the company is moving into the automotive repair arena. Snap-on projects capital spending of $90 million to $100 million in 2019, of which it has already spent $20.2 million in the first quarter.
Disclosure: I do not hold any positions in the stocks mentioned.
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This article first appeared on GuruFocus.
Warning! GuruFocus has detected 2 Warning Sign with SNA. Click here to check it out.
The intrinsic value of SNA
