Q2 2019 diluted EPS of $3.22,
up 3.2% from Q2 2018
Q2 2019 operating margin before financial
services of 20.0%
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 operating results for the second
quarter of 2019.
- Net sales of $951.3 million decreased $3.3 million, or 0.3%,
from 2018 levels, reflecting a $15.1 million, or 1.6%, organic
sales increase and $1.1 million of acquisition-related sales, more
than offset by $19.5 million of unfavorable foreign currency
translation.
- Operating earnings before financial services for the quarter of
$189.9 million, or 20.0% of sales, including $5.9 million of
unfavorable foreign currency effects, compared to $193.1 million,
or 20.2% of sales, last year.
- Financial services revenue of $84.1 million in the second
quarter of 2019 increased $2.1 million from 2018 levels; financial
services operating earnings of $60.6 million increased $2.8 million
from $57.8 million last year.
- Consolidated operating earnings of $250.5 million, including
$6.3 million of unfavorable currency effects, compared to $250.9
million last year. As a percentage of revenues (net sales plus
financial services revenue), consolidated operating earnings were
24.2% in both years.
- The second quarter effective income tax rate of 23.6% compared
to 23.8% last year. In 2018, the effective income tax rate included
a benefit of 20 basis points, or $0.5 million, related to the
implementation of U.S. tax legislation (the “tax benefit”).
Excluding the tax benefit, the effective tax rate, as adjusted, was
24.0% last year.
- Net earnings of $180.4 million, or $3.22 per diluted share,
compared to $178.7 million, or $3.12 per diluted share, a year ago.
Excluding the above-mentioned tax benefit, net earnings, as
adjusted, were $178.2 million in 2018, or $3.11 per diluted
share.
See “Non-GAAP Measures” below for a definition of, and further
explanation about, organic sales and measures, as adjusted,
excluding the tax benefit.
“We are encouraged by our second quarter 2019 results. While
sales were mixed in the period, we did experience clear sales gains
to customers across our U.S. operations and delivered overall
organic growth, overcoming the variation and the turbulence,” said
Nick Pinchuk, Snap-on chairman and chief executive officer. “The
quarter did see continuing headwinds related to particularly
challenged geographies and to unfavorable currency, but the
effectiveness of our Snap-on Value Creation Processes drove
strength in our operating earnings margins and yet another
year-over-year increase in earnings per diluted share. Despite the
challenges of this period, we believe the overall macro-economic
environment for the vehicle repair and the critical industries
markets we serve generally remain robust and provide continuing
opportunities to make work easier for serious professionals.
Finally, our results are only possible with the ongoing capability
and contributions from our franchisees and associates, and I thank
them for their dedication and commitment.”
Segment Results
Commercial & Industrial Group segment sales of $335.0
million in the quarter decreased $2.8 million, or 0.8%, from 2018
levels, reflecting a $6.2 million, or 1.9%, organic sales gain and
$1.1 million of acquisition-related sales, more than offset by
$10.1 million of unfavorable foreign currency translation. The
organic sales increase includes higher sales in the segment’s
specialty tools and European hand tools businesses, as well as
increases with customers in critical industries.
Operating earnings of $48.9 million in the period, including
$0.9 million of unfavorable foreign currency effects, compared to
$49.0 million in 2018, while the operating margin (operating
earnings as a percentage of segment sales) of 14.6% compared to
14.5% a year ago.
Snap-on Tools Group segment sales of $405.8 million in
the quarter decreased $6.1 million, or 1.5%, from 2018 levels,
reflecting a $1.0 million, or 0.2%, organic sales decline and $5.1
million of unfavorable foreign currency translation. The organic
sales decrease includes lower sales in the segment’s international
operations, partially offset by higher sales in the U.S. franchise
operations.
Operating earnings of $71.3 million in the period, including
$3.8 million of unfavorable foreign currency effects, decreased
$7.7 million from 2018 levels, and the operating margin of 17.6%
compared to 19.2% last year.
Repair Systems & Information Group segment sales of
$348.9 million in the quarter increased $5.8 million, or 1.7%, from
2018 levels, reflecting an $11.7 million, or 3.5%, organic sales
gain, partially offset by $5.9 million of unfavorable foreign
currency translation. The organic sales increase primarily reflects
higher sales to OEM dealerships.
Operating earnings of $88.6 million in the period, including
$1.2 million of unfavorable foreign currency effects, compared to
$88.7 million in 2018, while the operating margin of 25.4% compared
to 25.9% a year ago.
Financial Services operating earnings of $60.6 million on
revenue of $84.1 million in the quarter compared to operating
earnings of $57.8 million on revenue of $82.0 million a year ago.
Originations of $263.4 million in the second quarter decreased
$12.7 million, or 4.6%, from 2018 levels.
Corporate expenses of $18.9 million in the quarter
compared to $23.6 million last year.
Outlook
Snap-on expects to make continued progress in 2019 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 extending 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 2019 will
be in a range of $90 million to $100 million, of which $48.2
million was incurred in the first six months of the year.
Snap-on currently anticipates that its full year 2019 effective
income tax rate will be comparable to its full year 2018 effective
tax rate of 24.0%.
Conference Call and Webcast on July 18,
2019, at 9:00 a.m. Central Time
A discussion of this release will be webcast on Thursday, July
18, 2019, 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 https://www.snapon.com/EN/Investors/Investor-Events and click
on the link to the call. 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 at
https://www.snapon.com/EN/Investors/Financial-Information/Quarterly-Earnings.
Non-GAAP Measures
References in this document to “organic sales” refer to sales
from continuing operations calculated in accordance with generally
accepted accounting principles in the United States (“GAAP”),
adjusted to exclude acquisition-related sales and the impact of
foreign currency translation. Management evaluates the company’s
sales performance based on organic sales growth, which primarily
reflects growth from the company’s existing businesses as a result
of increased output, customer base and geographic expansion, new
product development and/or pricing, and excludes sales
contributions from acquired operations the company did not own as
of the comparable prior-year reporting period. The company’s
organic sales disclosures also exclude the effects of foreign
currency translation as foreign currency translation is subject to
volatility that can obscure underlying business trends. Management
believes that the non-GAAP financial measure of organic sales is
meaningful to investors as it provides them with useful information
to aid in identifying underlying growth trends in our businesses
and facilitates comparisons of our sales performance with prior
periods.
For the six months ended June 29, 2019, the company is including
operating earnings before financial services, consolidated
operating earnings, net earnings, diluted earnings per share and
its effective tax rate, all as adjusted to exclude the impact of an
$11.6 million benefit ($8.7 million after tax) from a legal
settlement that occurred in the three months ended March 30,
2019.
For the three and six months ended June 30, 2018, the company is
including net earnings, diluted earnings per share and its
effective tax rate, all as adjusted, to exclude the impact of a
$0.5 million benefit and $2.1 million charge, respectively, related
to the implementation of U.S. tax legislation. In addition, for the
six months ended June 30, 2018, the company is including net
earnings and diluted earnings per share, both as adjusted to
exclude a net gain of $5.5 million ($4.1 million after tax)
associated with a treasury lock settlement gain of $13.3 million
related to the issuance of debt, partially offset by a $7.8 million
expense related to the early extinguishment of debt.
Management believes that these are unusual events and therefore
the non-GAAP financial measures adjusted to exclude them provide
more meaningful year-over-year comparisons of the company’s 2019
operating performance. For a reconciliation of the adjusted
metrics, see “Reconciliation of Non-GAAP Financial Measures”
below.
About Snap-on
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 and support its
franchise business. Products and services are sold through the
company’s franchisee, company-direct, distributor and internet
channels. Founded in 1920, Snap-on is a $3.7 billion, S&P 500
company headquartered in Kenosha, Wisconsin.
Forward-looking
Statements
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 December 29, 2018, 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.
SNAP-ON INCORPORATED Condensed Consolidated Statements of
Earnings (Amounts in millions, except per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
Net sales
$
951.3
$
954.6
$
1,873.0
$
1,890.1
Cost of goods sold
(477.5
)
(467.5
)
(927.6
)
(931.4
)
Gross profit
473.8
487.1
945.4
958.7
Operating expenses
(283.9
)
(294.0
)
(568.1
)
(587.9
)
Operating earnings before financial services
189.9
193.1
377.3
370.8
Financial services revenue
84.1
82.0
169.7
165.0
Financial services expenses
(23.5
)
(24.2
)
(47.0
)
(50.3
)
Operating earnings from financial services
60.6
57.8
122.7
114.7
Operating earnings
250.5
250.9
500.0
485.5
Interest expense
(12.4
)
(12.0
)
(24.9
)
(25.6
)
Other income (expense) – net
2.1
(0.6
)
3.6
2.2
Earnings before income taxes and equity earnings
240.2
238.3
478.7
462.1
Income tax expense
(55.6
)
(55.8
)
(112.5
)
(113.4
)
Earnings before equity earnings
184.6
182.5
366.2
348.7
Equity earnings, net of tax
0.3
0.2
0.8
0.8
Net earnings
184.9
182.7
367.0
349.5
Net earnings attributable to noncontrolling interests
(4.5
)
(4.0
)
(8.7
)
(7.8
)
Net earnings attributable to Snap-on Inc.
$
180.4
$
178.7
$
358.3
$
341.7
Net earnings per share attributable to Snap-on
Inc.: Basic
$
3.27
$
3.17
$
6.47
$
6.04
Diluted
3.22
3.12
6.38
5.93
Weighted-average shares outstanding: Basic
55.2
56.4
55.4
56.6
Effect of dilutive securities
0.8
0.9
0.8
1.0
Diluted
56.0
57.3
56.2
57.6
SNAP-ON INCORPORATED Supplemental Segment Information
(Amounts in millions) (unaudited)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
Net sales: Commercial & Industrial Group
$
335.0
$
337.8
$
657.5
$
669.4
Snap-on Tools Group
405.8
411.9
816.0
816.6
Repair Systems & Information Group
348.9
343.1
676.8
680.1
Segment net sales
1,089.7
1,092.8
2,150.3
2,166.1
Intersegment eliminations
(138.4
)
(138.2
)
(277.3
)
(276.0
)
Total net sales
$
951.3
$
954.6
$
1,873.0
$
1,890.1
Financial Services revenue
84.1
82.0
169.7
165.0
Total revenues
$
1,035.4
$
1,036.6
$
2,042.7
$
2,055.1
Operating earnings: Commercial & Industrial Group
$
48.9
$
49.0
$
95.4
$
95.5
Snap-on Tools Group
71.3
79.0
138.5
147.9
Repair Systems & Information Group
88.6
88.7
172.2
174.5
Financial Services
60.6
57.8
122.7
114.7
Segment operating earnings
269.4
274.5
528.8
532.6
Corporate
(18.9
)
(23.6
)
(28.8
)
(47.1
)
Operating earnings
$
250.5
$
250.9
$
500.0
$
485.5
Interest expense
(12.4
)
(12.0
)
(24.9
)
(25.6
)
Other income (expense) – net
2.1
(0.6
)
3.6
2.2
Earnings before income taxes and equity earnings
$
240.2
$
238.3
$
478.7
$
462.1
SNAP-ON INCORPORATED Condensed Consolidated Balance
Sheets (Amounts in millions) (unaudited)
June 29, December 29,
2019
2018
Assets Cash and cash equivalents
$
164.0
$
140.9
Trade and other accounts receivable – net
684.1
692.6
Finance receivables – net
529.0
518.5
Contract receivables – net
91.5
98.3
Inventories – net
725.8
673.8
Prepaid expenses and other assets
112.2
92.8
Total current assets
2,306.6
2,216.9
Property and equipment – net
506.4
495.1
Operating lease right-of-use assets
55.4
-
Deferred income tax assets
53.9
64.7
Long-term finance receivables – net
1,089.0
1,074.4
Long-term contract receivables – net
347.5
344.9
Goodwill
907.0
902.2
Other intangibles – net
227.9
232.9
Other assets
51.7
42.0
Total assets
$
5,545.4
$
5,373.1
Liabilities and Equity Notes payable
$
168.2
$
186.3
Accounts payable
215.3
201.1
Accrued benefits
42.4
52.0
Accrued compensation
62.2
71.5
Franchisee deposits
69.5
67.5
Other accrued liabilities
373.2
373.6
Total current liabilities
930.8
952.0
Long-term debt
947.9
946.0
Deferred income tax liabilities
45.4
41.4
Retiree health care benefits
30.5
31.8
Pension liabilities
136.6
171.3
Operating lease liabilities
35.7
-
Other long-term liabilities
109.8
112.0
Total liabilities
2,236.7
2,254.5
Equity Shareholders' equity attributable to
Snap-on Inc. Common stock
67.4
67.4
Additional paid-in capital
371.7
359.4
Retained earnings
4,556.1
4,257.6
Accumulated other comprehensive loss
(500.7
)
(462.2
)
Treasury stock at cost
(1,206.4
)
(1,123.4
)
Total shareholders' equity attributable to Snap-on Inc.
3,288.1
3,098.8
Noncontrolling interests
20.6
19.8
Total equity
3,308.7
3,118.6
Total liabilities and equity
$
5,545.4
$
5,373.1
SNAP-ON INCORPORATED Condensed Consolidated Statements of
Cash Flows (Amounts in millions) (unaudited)
Three Months Ended
June 29,
June 30,
2019
2018
Operating activities: Net earnings
$
184.9
$
182.7
Adjustments to reconcile net earnings to net cash provided (used)
by operating activities: Depreciation
17.6
17.6
Amortization of other intangibles
5.4
6.4
Provision for losses on finance receivables
11.9
13.6
Provision for losses on non-finance receivables
3.7
3.5
Stock-based compensation expense
6.8
7.9
Deferred income tax provision (benefit)
7.0
(4.5
)
Loss on sales of assets
0.3
0.2
Changes in operating assets and liabilities, net of effects of
acquisitions: Increase in trade and other accounts receivable
(10.9
)
(10.7
)
Increase in contract receivables
(3.1
)
(6.7
)
Increase in inventories
(19.6
)
(14.3
)
(Increase) decrease in prepaid and other assets
(7.3
)
6.4
Increase in accounts payable
14.8
15.9
Decrease in accruals and other liabilities
(66.0
)
(31.1
)
Net cash provided by operating activities
145.5
186.9
Investing activities: Additions to finance
receivables
(220.6
)
(231.1
)
Collections of finance receivables
191.6
190.8
Capital expenditures
(28.0
)
(20.6
)
Acquisitions of businesses, net of cash acquired
(8.0
)
-
Disposals of property and equipment
0.2
0.1
Other
(0.4
)
(2.9
)
Net cash used by investing activities
(65.2
)
(63.7
)
Financing activities: Net increase (decrease) in
other short-term borrowings
25.6
(16.1
)
Cash dividends paid
(52.5
)
(46.3
)
Purchases of treasury stock
(60.1
)
(55.2
)
Proceeds from stock purchase and option plans
19.8
16.8
Other
(5.9
)
(4.5
)
Net cash used by financing activities
(73.1
)
(105.3
)
Effect of exchange rate changes on cash and cash
equivalents
0.4
(3.1
)
Increase in cash and cash equivalents
7.6
14.8
Cash and cash equivalents at beginning of period
156.4
97.5
Cash and cash equivalents at end of period
$
164.0
$
112.3
Supplemental cash flow disclosures: Cash paid for
interest
$
(1.8
)
$
(1.5
)
Net cash paid for income taxes
(73.8
)
(86.0
)
SNAP-ON INCORPORATED
Condensed Consolidated
Statements of Cash Flows
(Amounts in millions)
(unaudited)
Six Months Ended
June 29,
June 30,
2019
2018
Operating activities: Net earnings
$
367.0
$
349.5
Adjustments to reconcile net earnings to net cash provided (used)
by operating activities: Depreciation
34.8
35.0
Amortization of other intangibles
10.8
13.0
Provision for losses on finance receivables
24.4
29.4
Provision for losses on non-finance receivables
8.7
5.5
Stock-based compensation expense
14.1
14.6
Deferred income tax provision (benefit)
12.4
(4.1
)
Loss on sales of assets
0.6
0.1
Loss on early extinguishment of debt
-
7.8
Changes in operating assets and liabilities, net of effects of
acquisitions: (Increase) decrease in trade and other accounts
receivable
3.9
(9.1
)
(Increase) decrease in contract receivables
3.0
(4.5
)
Increase in inventories
(52.8
)
(24.5
)
(Increase) decrease in prepaid and other assets
(27.0
)
6.4
Increase in accounts payable
16.6
25.4
Decrease in accruals and other liabilities
(69.7
)
(25.7
)
Net cash provided by operating activities
346.8
418.8
Investing activities: Additions to finance
receivables
(431.1
)
(436.7
)
Collections of finance receivables
383.5
379.9
Capital expenditures
(48.2
)
(38.6
)
Acquisitions of businesses, net of cash acquired
(9.3
)
(3.0
)
Disposals of property and equipment
0.4
0.5
Other
0.8
(2.9
)
Net cash used by investing activities
(103.9
)
(100.8
)
Financing activities: Proceeds from issuance of
long-term debt
-
395.4
Repayments of long-term debt
-
(457.8
)
Repayment of notes payable
-
(16.8
)
Net decrease in other short-term borrowings
(18.2
)
(37.2
)
Cash dividends paid
(105.3
)
(92.8
)
Purchases of treasury stock
(107.5
)
(98.7
)
Proceeds from stock purchase and option plans
24.6
28.3
Other
(14.3
)
(16.2
)
Net cash used by financing activities
(220.7
)
(295.8
)
Effect of exchange rate changes on cash and cash
equivalents
0.9
(1.9
)
Increase in cash and cash equivalents
23.1
20.3
Cash and cash equivalents at beginning of year
140.9
92.0
Cash and cash equivalents at end of period
$
164.0
$
112.3
Supplemental cash flow disclosures: Cash paid for
interest
$
(23.4
)
$
(27.8
)
Net cash paid for income taxes
(92.2
)
(97.4
)
Non-GAAP Supplemental
Data
The following non-GAAP
supplemental data is presented for informational purposes to
provide readers with insight into the information used by
management for assessing the operating performance of Snap-on
Incorporated's ("Snap-on") non-financial services ("Operations")
and "Financial Services" businesses.
The supplemental Operations
data reflects the results of operations and financial position of
Snap-on's tools, diagnostic and equipment products, software and
other non-financial services operations with Financial Services on
the equity method. The supplemental Financial Services data
reflects the results of operations and financial position of
Snap-on's U.S. and international financial services operations. The
financing needs of Financial Services are met through intersegment
borrowings and cash generated from Operations; Financial Services
is charged interest expense on intersegment borrowings at market
rates. Income taxes are charged to Financial Services on the basis
of the specific tax attributes generated by the U.S. and
international financial services businesses. Transactions between
the Operations and Financial Services businesses were eliminated to
arrive at the Condensed Consolidated Financial
Statements.
SNAP-ON INCORPORATED Non-GAAP Supplemental Consolidating
Data - Supplemental Condensed Statements of Earnings
(Amounts in millions) (unaudited)
Operations* Financial Services Three Months
Ended Three Months Ended June 29, June 30,
June 29, June 30,
2019
2018
2019
2018
Net sales
$
951.3
$
954.6
$
-
$
-
Cost of goods sold
(477.5
)
(467.5
)
-
-
Gross profit
473.8
487.1
-
-
Operating expenses
(283.9
)
(294.0
)
-
-
Operating earnings before financial services
189.9
193.1
-
-
Financial services revenue
-
-
84.1
82.0
Financial services expenses
-
-
(23.5
)
(24.2
)
Operating earnings from financial services
-
-
60.6
57.8
Operating earnings
189.9
193.1
60.6
57.8
Interest expense
(12.3
)
(11.9
)
(0.1
)
(0.1
)
Intersegment interest income (expense) – net
17.8
17.2
(17.8
)
(17.2
)
Other income (expense) – net
2.1
(0.7
)
-
0.1
Earnings before income taxes and equity earnings
197.5
197.7
42.7
40.6
Income tax expense
(44.5
)
(45.2
)
(11.1
)
(10.6
)
Earnings before equity earnings
153.0
152.5
31.6
30.0
Financial services – net earnings attributable to
Snap-on
31.6
30.0
-
-
Equity earnings, net of tax
0.3
0.2
-
-
Net earnings
184.9
182.7
31.6
30.0
Net earnings attributable to noncontrolling interests
(4.5
)
(4.0
)
-
-
Net earnings attributable to Snap-on
$
180.4
$
178.7
$
31.6
$
30.0
* Snap-on with Financial Services on the equity method.
SNAP-ON INCORPORATED Non-GAAP Supplemental Consolidating
Data - Supplemental Condensed Statements of Earnings
(Amounts in millions) (unaudited)
Operations*
Financial Services
Six Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
Net sales
$
1,873.0
$
1,890.1
$
-
$
-
Cost of goods sold
(927.6
)
(931.4
)
-
-
Gross profit
945.4
958.7
-
-
Operating expenses
(568.1
)
(587.9
)
-
-
Operating earnings before financial services
377.3
370.8
-
-
Financial services revenue
-
-
169.7
165.0
Financial services expenses
-
-
(47.0
)
(50.3
)
Operating earnings from financial services
-
-
122.7
114.7
Operating earnings
377.3
370.8
122.7
114.7
Interest expense
(24.8
)
(25.4
)
(0.1
)
(0.2
)
Intersegment interest income (expense) – net
35.5
36.1
(35.5
)
(36.1
)
Other income (expense) – net
3.6
2.1
-
0.1
Earnings before income taxes and equity earnings
391.6
383.6
87.1
78.5
Income tax expense
(89.9
)
(93.0
)
(22.6
)
(20.4
)
Earnings before equity earnings
301.7
290.6
64.5
58.1
Financial services – net earnings attributable to
Snap-on
64.5
58.1
-
-
Equity earnings, net of tax
0.8
0.8
-
-
Net earnings
367.0
349.5
64.5
58.1
Net earnings attributable to noncontrolling interests
(8.7
)
(7.8
)
-
-
Net earnings attributable to Snap-on
$
358.3
$
341.7
$
64.5
$
58.1
* Snap-on with Financial Services on the equity method.
SNAP-ON INCORPORATED
Non-GAAP Supplemental
Consolidating Data - Supplemental Condensed Balance Sheets
(Amounts in millions)
(unaudited)
Operations*
Financial Services
June 29,
December 29,
June 29,
December 29,
2019
2018
2019
2018
Assets Cash and cash equivalents
$
163.9
$
140.5
$
0.1
$
0.4
Intersegment receivables
13.4
15.1
-
-
Trade and other accounts receivable – net
683.4
692.1
0.7
0.5
Finance receivables – net
-
-
529.0
518.5
Contract receivables – net
6.6
6.6
84.9
91.7
Inventories – net
725.8
673.8
-
-
Prepaid expenses and other assets
112.8
100.2
7.5
0.5
Total current assets
1,705.9
1,628.3
622.2
611.6
Property and equipment – net
504.8
493.5
1.6
1.6
Operating lease right-of-use assets
53.7
-
1.7
-
Investment in Financial Services
334.2
329.5
-
-
Deferred income tax assets
34.9
45.8
19.0
18.9
Intersegment long-term notes receivable
723.0
701.3
-
-
Long-term finance receivables – net
-
-
1,089.0
1,074.4
Long-term contract receivables – net
13.7
11.9
333.8
333.0
Goodwill
907.0
902.2
-
-
Other intangibles – net
227.9
232.9
-
-
Other assets
61.9
51.9
0.1
0.1
Total assets
$
4,567.0
$
4,397.3
$
2,067.4
$
2,039.6
Liabilities and Equity Notes payable
$
168.2
$
186.3
$
-
$
-
Accounts payable
214.1
199.6
1.2
1.5
Intersegment payables
-
-
13.4
15.1
Accrued benefits
42.4
52.0
-
-
Accrued compensation
59.5
66.8
2.7
4.7
Franchisee deposits
69.5
67.5
-
-
Other accrued liabilities
352.9
355.4
28.4
26.1
Total current liabilities
906.6
927.6
45.7
47.4
Long-term debt and intersegment long-term debt
-
-
1,670.9
1,647.3
Deferred income tax liabilities
45.4
41.4
-
-
Retiree health care benefits
30.5
31.8
-
-
Pension liabilities
136.6
171.3
-
-
Operating lease liabilities
34.3
-
1.4
-
Other long-term liabilities
104.9
106.6
15.2
15.4
Total liabilities
1,258.3
1,278.7
1,733.2
1,710.1
Total shareholders' equity attributable to Snap-on
3,288.1
3,098.8
334.2
329.5
Noncontrolling interests
20.6
19.8
-
-
Total equity
3,308.7
3,118.6
334.2
329.5
Total liabilities and equity
$
4,567.0
$
4,397.3
$
2,067.4
$
2,039.6
* Snap-on with Financial Services on the equity method.
SNAP-ON INCORPORATED Reconciliation of Non-GAAP Financial
Measures (Amounts in millions, except per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
AS REPORTED Benefit
related to the settlement of a litigation matter ("legal
settlement") Pre-tax legal settlement
$
-
$
-
$
11.6
$
-
Income tax expense
-
-
(2.9
)
-
Legal settlement, after tax
$
-
$
-
$
8.7
$
-
Weighted-average shares outstanding - diluted
56.0
57.3
56.2
57.6
Diluted EPS - legal settlement
$
-
$
-
$
0.15
$
-
Debt-related items ("net debt items") Gain on
settlement of treasury lock (A) Gain on settlement of treasury
lock
$
-
$
-
$
-
$
13.3
Income tax expense
-
-
-
(3.3
)
Gain on settlement of treasury lock, after tax
$
-
$
-
$
-
$
10.0
Weighted-average shares outstanding - diluted
56.0
57.3
56.2
57.6
Diluted EPS - gain on settlement of treasury lock
$
-
$
-
$
-
$
0.17
Loss on early extinguishment of debt (B) Loss on
early extinguishment of debt
$
-
$
-
$
-
$
(7.8
)
Income tax benefit
-
-
-
1.9
Loss on early extinguishment of debt, after tax
$
-
$
-
$
-
$
(5.9
)
Weighted-average shares outstanding - diluted
56.0
57.3
56.2
57.6
Diluted EPS - loss on early extinguishment of debt
$
-
$
-
$
-
$
(0.10
)
Net debt items (A + B) Net debt items
$
-
$
-
$
-
$
5.5
Income tax expense
-
-
-
(1.4
)
Net debt items, after tax
$
-
$
-
$
-
$
4.1
Weighted-average shares outstanding - diluted
56.0
57.3
56.2
57.6
Diluted EPS - net debt items
$
-
$
-
$
-
$
0.07
Adjustments related to implementation of tax
legislation ("tax benefit/charge") Tax benefit/(charge)
$
-
$
0.5
$
-
$
(2.1
)
Weighted-average shares outstanding - diluted
56.0
57.3
56.2
57.6
Diluted EPS - tax benefit/(charge)
$
-
$
0.01
$
-
$
(0.04
)
SNAP-ON INCORPORATED
Reconciliation of Non-GAAP
Financial Measures (continued)
(Amounts in millions, except
per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
ADJUSTED INFORMATION - NON-GAAP
1)
Operating earnings before financial services As reported
$
189.9
$
193.1
$
377.3
$
370.8
Legal settlement
-
-
(11.6
)
-
As adjusted
$
189.9
$
193.1
$
365.7
$
370.8
Operating earnings before financial services as a
percentage of sales As reported
20.0
%
20.2
%
20.1
%
19.6
%
As adjusted
20.0
%
20.2
%
19.5
%
19.6
%
2)
Operating earnings As reported
$
250.5
$
250.9
$
500.0
$
485.5
Legal settlement
-
-
(11.6
)
-
As adjusted
$
250.5
$
250.9
$
488.4
$
485.5
Operating earnings as a percentage of revenue As
reported
24.2
%
24.2
%
24.5
%
23.6
%
As adjusted
24.2
%
24.2
%
23.9
%
23.6
%
3)
Net earnings attributable to Snap-on Incorporated As
reported
$
180.4
$
178.7
$
358.3
$
341.7
Legal settlement, after tax
-
-
(8.7
)
-
Net debt items, after tax
-
-
-
(4.1
)
Tax (benefit)/charge
-
(0.5
)
-
2.1
As adjusted
$
180.4
$
178.2
$
349.6
$
339.7
4)
Diluted EPS As reported
$
3.22
$
3.12
$
6.38
$
5.93
Legal settlement, after tax
-
-
(0.15
)
-
Net debt items, after tax
-
-
-
(0.07
)
Tax (benefit)/charge
-
(0.01
)
-
0.04
As adjusted
$
3.22
$
3.11
$
6.23
$
5.90
5)
Effective tax rate As reported
23.6
%
23.8
%
23.9
%
25.0
%
Tax benefit/(charge)
-
0.2
%
-
-0.5
%
As adjusted
23.6
%
24.0
%
23.9
%
24.5
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190718005148/en/
Investors: Sara Verbsky 262/656-4869
Media: Samuel Bottum 262/656-5793
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