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Snap-on Incorporated SNA recently acquired AutoCrib, Inc. in a deal worth nearly $36 million in cash. Being a leading manufacturer, designer and seller of tool and asset control solutions, AutoCrib generated roughly $30 million in sales in 2019.
Following the acquisition, AutoCrib will be part of Snap-on’s Commercial & Industrial Group. Gains from this buyout are likely to be reflected starting fourth-quarter 2020. This deal is expected to add value to the company’s existing tool products for use in aerospace, automotive, military, natural resources and general industry.
The company is making efforts to develop and expand the professional customer base in the automotive repair business, as well as adjacent industries, additional geographies and other areas like critical industries. Driven by these initiatives, the company now expects capital expenditure of $75-$85 million for 2020, up from the earlier guided view of $70-$80 million. Also, it has more than $800 million in credit facilities, which is likely to help Snap-on stay afloat amid the pandemic.
Apart from these, it is dedicated to various strategic principles and processes aimed at creating value in areas like Rapid Continuous Improvement (RCI). The RCI process is designed to enhance organizational effectiveness and minimize costs, besides helping Snap-on boost sales and margins, and generate savings. Savings from the RCI initiative reflect gains from the continuous productivity and process improvement plans. Going ahead, Snap-on intends to boost customer services along with enhancing manufacturing and supply-chain capabilities through the RCI initiatives and further investments.
However, the company is reeling under a tough economic environment and unprecedented COVID-19 impacts. Further, the adverse impacts of foreign currency remain a drag. Notably, the top line in second-quarter 2020 included $14.4 million of negative impacts of foreign currency.
We note that shares of this Zacks Rank #4 (Sell) company have lost 14.2% year to date compared with the industry’s decline of 4.6%.
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