Q4 2019 diluted EPS of $3.08, compares
to as reported Q4 2018 diluted EPS of $3.09, and to
as adjusted Q4 2018 diluted EPS of $3.03
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 2019 operating results for the
fourth quarter and full year.
- Net sales of $955.2 million in the quarter increased $2.7
million, or 0.3%, from 2018 levels, reflecting a $5.5 million, or
0.6%, organic sales increase and $3.5 million of
acquisition-related sales, partially offset by $6.3 million of
unfavorable foreign currency translation.
- Operating earnings before financial services for the quarter of
$171.4 million, or 17.9% of sales, including $2.5 million of
unfavorable foreign currency effects, compared to $182.1 million,
or 19.1% of sales last year. In 2018, operating earnings before
financial services included a $4.3 million benefit from the
settlement of an employment-related litigation matter that was
being appealed (the “2018 legal settlement”); excluding the 2018
legal settlement, operating earnings before financial services, as
adjusted, were $177.8 million, or 18.7% of sales last year.
- Financial services revenue in the quarter of $83.9 million
increased $1.2 million from 2018 levels; financial services
operating earnings of $62.2 million compared to $56.1 million last
year.
- Consolidated operating earnings totaled $233.6 million,
including $2.6 million of unfavorable foreign currency effects,
which compared to $238.2 million in the fourth quarter of 2018. As
a percentage of revenues (net sales plus financial services
revenue), consolidated operating earnings were 22.5% and 23.0% in
the fourth quarters of 2019 and 2018, respectively. Excluding the
2018 legal settlement, consolidated operating earnings, as
adjusted, were $233.9 million, or 22.6% of revenues, a year
ago.
- The fourth quarter effective income tax rate was 22.3% in 2019
and 22.0% in 2018.
- Net earnings of $170.6 million, or $3.08 per diluted share, in
the quarter compared to $175.0 million, or $3.09 per diluted share,
a year ago. Excluding the 2018 legal settlement, net earnings, as
adjusted, were $171.8 million, or $3.03 per diluted share, in
2018.
- Full year net sales of $3,730.0 million decreased $10.7
million, or 0.3%, from 2018 levels, reflecting a $45.4 million, or
1.2%, organic sales gain and $7.5 million of acquisition-related
sales, more than offset by $63.6 million of unfavorable foreign
currency translation. Full year net earnings of $693.5 million, or
$12.41 per diluted share, compared to net earnings of $679.9
million, or $11.87 per diluted share, last year. In 2019, excluding
the first quarter legal settlement related to a patent-related
litigation matter that was being appealed (the “2019 legal
settlement”), net earnings, as adjusted, were $684.8 million, or
$12.26 per diluted share. In 2018, excluding the first quarter net
debt items related to the issuance and extinguishment of debt, the
2018 legal settlement and a charge associated with U.S. tax
legislation (the “tax charge”), net earnings, as adjusted, were
$676.5 million, or $11.81 per diluted share. Earnings per diluted
share, as adjusted, of $12.26 in 2019, increased 3.8% versus the
prior year, as adjusted.
See “Non-GAAP Measures” below for a definition of, and further
explanation about, organic sales and measures, as adjusted,
excluding the legal settlements, net debt items and tax charge.
“We are encouraged by our progress in strengthening our
operations in 2019 despite ongoing headwinds from unfavorable
currency and economic challenges in certain geographies throughout
the year,” said Nick Pinchuk, Snap-on chairman and chief executive
officer. “Our results have demonstrated progress along a number of
our runways for growth, including within our U.S. franchise
network, and reflected the effectiveness of our Snap-on Value
Creation Processes to help mitigate the headwinds. Finally, as we
begin 2020, our 100th anniversary year, I want to thank our
franchisees and associates for their ongoing contributions and to
recognize their capabilities and commitment in making our progress
possible now and in the future.”
Segment Results - Fourth
Quarter
Commercial & Industrial Group segment sales of $352.9
million in the quarter increased $9.2 million, or 2.7%, from 2018
levels, reflecting an $11.8 million, or 3.5%, organic sales gain
and $0.9 million of acquisition-related sales, partially offset by
$3.5 million of unfavorable foreign currency translation. The
organic sales increase includes higher sales in the segment’s power
tools and Asia Pacific operations, as well as increases with
customers in critical industries, partially offset by lower sales
in the segment's European-based hand tools business.
Operating earnings of $45.0 million in the period, including
$0.6 million of unfavorable foreign currency effects, compared to
$50.8 million in 2018, while the operating margin (operating
earnings as a percentage of segment sales) of 12.8% compared to
14.8% a year ago.
Snap-on Tools Group segment sales of $411.7 million in
the quarter increased $4.3 million, or 1.1%, from 2018 levels,
reflecting a $5.3 million, or 1.3%, organic sales gain, partially
offset by $1.0 million of unfavorable foreign currency translation.
The organic sales increase includes higher sales in the U.S. van
network, partially offset by a decrease in the segment’s
international operations.
Operating earnings of $54.3 million in the period, including
$1.7 million of unfavorable foreign currency effects, decreased
$2.7 million from 2018 levels, and the operating margin of 13.2%
compared to 14.0% last year.
Repair Systems & Information Group segment sales of
$335.0 million in the quarter decreased $4.9 million, or 1.4%, from
2018 levels, reflecting a $5.2 million, or 1.5%, organic sales
decline and $2.3 million of unfavorable foreign currency
translation, partially offset by $2.6 million of
acquisition-related sales. The organic decrease includes lower
sales to OEM dealerships, partially offset by higher sales of
undercar equipment and increased sales of diagnostics and repair
information products to independent repair shop owners and
managers.
Operating earnings of $87.2 million in the period, including
$0.2 million of unfavorable foreign currency effects, compared to
$87.4 million in 2018, while the operating margin of 26.0% compared
to 25.7% a year ago.
Financial Services operating earnings of $62.2 million on
revenue of $83.9 million in the quarter compared to operating
earnings of $56.1 million on revenue of $82.7 million a year ago.
Originations of $262.4 million in the fourth quarter decreased $4.7
million, or 1.8%, from 2018 levels.
Corporate expenses of $15.1 million in the quarter
compared to $13.1 million last year.
Outlook
As Snap-on enters its 100th anniversary year, the company
expects to make continued progress in 2020 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 2020 will
be in a range of $90 million to $100 million.
Snap-on currently anticipates that its full year 2020 effective
income tax rate will be in the range of 23% to 24%.
Conference Call and Webcast on February
6, 2020, at 9:00 a.m. Central Time
A discussion of this release will be webcast on Thursday,
February 6, 2020, 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 full year 2019, the company is including operating
earnings before financial services, consolidated operating
earnings, net earnings and diluted earnings per share, all as
adjusted to exclude the impact of an $11.6 million benefit ($8.7
million after tax) from the 2019 legal settlement, which occurred
in the first quarter of fiscal 2019.
For the fourth quarter and full year 2018, the company is
including operating earnings before financial services,
consolidated operating earnings, net earnings and diluted earnings
per share, all as adjusted to exclude the impact of a $4.3 million
benefit ($3.2 million after tax) from the 2018 legal settlement. In
addition, for the full year 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, both of which
occurred in the first quarter of fiscal 2018. Finally, for the full
year 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 $3.9 million charge related to the implementation
of U.S. tax legislation.
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)
Fourth Quarter
Full Year
2019
2018
2019
2018
Net sales
$
955.2
$
952.5
$
3,730.0
$
3,740.7
Cost of goods sold
(504.7
)
(495.1
)
(1,886.0
)
(1,870.7
)
Gross profit
450.5
457.4
1,844.0
1,870.0
Operating expenses
(279.1
)
(275.3
)
(1,127.6
)
(1,144.0
)
Operating earnings before financial
services
171.4
182.1
716.4
726.0
Financial services revenue
83.9
82.7
337.7
329.7
Financial services expenses
(21.7
)
(26.6
)
(91.8
)
(99.6
)
Operating earnings from financial
services
62.2
56.1
245.9
230.1
Operating earnings
233.6
238.2
962.3
956.1
Interest expense
(12.1
)
(12.4
)
(49.0
)
(50.4
)
Other income (expense) – net
2.4
3.0
8.8
4.2
Earnings before income taxes and equity
earnings
223.9
228.8
922.1
909.9
Income tax expense
(48.9
)
(49.5
)
(211.8
)
(214.4
)
Earnings before equity earnings
175.0
179.3
710.3
695.5
Equity earnings, net of tax
—
—
0.9
0.7
Net earnings
175.0
179.3
711.2
696.2
Net earnings attributable to
noncontrolling interests
(4.4
)
(4.3
)
(17.7
)
(16.3
)
Net earnings attributable to Snap-on
Inc.
$
170.6
$
175.0
$
693.5
$
679.9
Net earnings per share attributable to
Snap-on Inc.:
Basic
$
3.12
$
3.14
$
12.59
$
12.08
Diluted
3.08
3.09
12.41
11.87
Weighted-average shares
outstanding:
Basic
54.7
55.8
55.1
56.3
Effect of dilutive securities
0.7
0.8
0.8
1.0
Diluted
55.4
56.6
55.9
57.3
SNAP-ON INCORPORATED
Supplemental Segment
Information
(Amounts in millions)
(unaudited)
Fourth Quarter
Full Year
2019
2018
2019
2018
Net sales:
Commercial & Industrial Group
$
352.9
$
343.7
$
1,345.7
$
1,343.3
Snap-on Tools Group
411.7
407.4
1,612.9
1,613.8
Repair Systems & Information Group
335.0
339.9
1,334.5
1,334.4
Segment net sales
1,099.6
1,091.0
4,293.1
4,291.5
Intersegment eliminations
(144.4
)
(138.5
)
(563.1
)
(550.8
)
Total net sales
955.2
952.5
3,730.0
3,740.7
Financial Services revenue
83.9
82.7
337.7
329.7
Total revenues
$
1,039.1
$
1,035.2
$
4,067.7
$
4,070.4
Operating earnings:
Commercial & Industrial Group
$
45.0
$
50.8
$
188.7
$
199.3
Snap-on Tools Group
54.3
57.0
245.8
264.2
Repair Systems & Information Group
87.2
87.4
342.7
342.6
Financial Services
62.2
56.1
245.9
230.1
Segment operating earnings
248.7
251.3
1,023.1
1,036.2
Corporate
(15.1
)
(13.1
)
(60.8
)
(80.1
)
Operating earnings
233.6
238.2
962.3
956.1
Interest expense
(12.1
)
(12.4
)
(49.0
)
(50.4
)
Other income (expense) – net
2.4
3.0
8.8
4.2
Earnings before income taxes and equity
earnings
$
223.9
$
228.8
$
922.1
$
909.9
SNAP-ON INCORPORATED
Condensed Consolidated Balance
Sheets
(Amounts in millions)
(unaudited)
Fiscal Year End
2019
2018
Assets
Cash and cash equivalents
$
184.5
$
140.9
Trade and other accounts receivable –
net
694.6
692.6
Finance receivables – net
530.1
518.5
Contract receivables – net
100.7
98.3
Inventories – net
760.4
673.8
Prepaid expenses and other assets
110.2
92.8
Total current assets
2,380.5
2,216.9
Property and equipment – net
521.5
495.1
Operating lease right-of-use assets
55.6
—
Deferred income tax assets
52.3
64.7
Long-term finance receivables – net
1,103.5
1,074.4
Long-term contract receivables – net
360.1
344.9
Goodwill
913.8
902.2
Other intangibles – net
243.9
232.9
Other assets
62.3
42.0
Total assets
$
5,693.5
$
5,373.1
Liabilities and Equity
Notes payable
$
202.9
$
186.3
Accounts payable
198.5
201.1
Accrued benefits
53.3
52.0
Accrued compensation
53.9
71.5
Franchisee deposits
68.2
67.5
Other accrued liabilities
370.8
373.6
Total current liabilities
947.6
952.0
Long-term debt
946.9
946.0
Deferred income tax liabilities
69.3
41.4
Retiree health care benefits
33.6
31.8
Pension liabilities
122.1
171.3
Operating lease liabilities
37.5
—
Other long-term liabilities
105.7
112.0
Total liabilities
2,262.7
2,254.5
Equity
Shareholders' equity attributable to
Snap-on Inc.
Common stock
67.4
67.4
Additional paid-in capital
379.1
359.4
Retained earnings
4,779.7
4,257.6
Accumulated other comprehensive loss
(507.9
)
(462.2
)
Treasury stock at cost
(1,309.2
)
(1,123.4
)
Total shareholders' equity attributable
to Snap-on Inc.
3,409.1
3,098.8
Noncontrolling interests
21.7
19.8
Total equity
3,430.8
3,118.6
Total liabilities and equity
$
5,693.5
$
5,373.1
SNAP-ON INCORPORATED
Condensed Consolidated
Statements of Cash Flows
(Amounts in millions)
(unaudited)
Fourth Quarter
2019
2018
Operating activities:
Net earnings
$
175.0
$
179.3
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation
17.9
16.8
Amortization of other intangibles
6.0
6.1
Provision for losses on finance
receivables
14.1
16.0
Provision for losses on non-finance
receivables
3.9
3.4
Stock-based compensation expense
5.1
4.6
Deferred income tax provision
23.5
20.6
Loss (gain) on sales of assets
0.1
(0.2
)
Changes in operating assets and
liabilities, net of effects of acquisition:
Trade and other accounts receivable
(7.3
)
(21.2
)
Contract receivables
(8.0
)
(3.0
)
Inventories
0.3
10.7
Prepaid and other assets
(5.2
)
11.5
Accounts payable
(11.8
)
2.3
Accruals and other liabilities
(16.9
)
(31.0
)
Net cash provided by operating
activities
196.7
215.9
Investing activities:
Additions to finance receivables
(213.8
)
(222.1
)
Collections of finance receivables
189.2
183.7
Capital expenditures
(21.6
)
(22.4
)
Acquisition of business, net of cash
acquired
0.3
—
Disposals of property and equipment
1.4
0.4
Other
3.1
(0.4
)
Net cash used by investing
activities
(41.4
)
(60.8
)
Financing activities:
Net increase (decrease) in other
short-term borrowings
(29.3
)
20.8
Cash dividends paid
(59.0
)
(53.1
)
Purchases of treasury stock
(71.2
)
(99.7
)
Proceeds from stock purchase and option
plans
25.2
1.4
Other
(4.9
)
(4.5
)
Net cash used by financing
activities
(139.2
)
(135.1
)
Effect of exchange rate changes on cash
and cash equivalents
0.9
(1.3
)
Increase in cash and cash
equivalents
17.0
18.7
Cash and cash equivalents at beginning of
period
167.5
122.2
Cash and cash equivalents at end of
year
$
184.5
$
140.9
Supplemental cash flow
disclosures:
Cash paid for interest
$
(1.5
)
$
(1.8
)
Net cash paid for income taxes
(50.7
)
(39.9
)
SNAP-ON INCORPORATED
Condensed Consolidated
Statements of Cash Flows
(Amounts in millions)
(unaudited)
Full Year
2019
2018
Operating activities:
Net earnings
$
711.2
$
696.2
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation
70.1
68.8
Amortization of other intangibles
22.3
25.3
Provision for losses on finance
receivables
49.9
57.5
Provision for losses on non-finance
receivables
18.3
12.8
Stock-based compensation expense
23.8
27.2
Deferred income tax provision
34.2
13.7
Loss on sales of assets
0.9
0.5
Loss on early extinguishment of debt
—
7.8
Changes in operating assets and
liabilities, net of effects of acquisitions:
Trade and other accounts receivable
(15.7
)
(47.7
)
Contract receivables
(20.9
)
(30.9
)
Inventories
(97.0
)
(38.6
)
Prepaid and other assets
(22.2
)
10.4
Accounts payable
(2.6
)
27.5
Accruals and other liabilities
(97.7
)
(66.0
)
Net cash provided by operating
activities
674.6
764.5
Investing activities:
Additions to finance receivables
(841.9
)
(865.6
)
Collections of finance receivables
754.3
747.7
Capital expenditures
(99.4
)
(90.9
)
Acquisitions of businesses, net of cash
acquired
(38.6
)
(3.0
)
Disposals of property and equipment
1.7
0.7
Other
1.8
0.9
Net cash used by investing
activities
(222.1
)
(210.2
)
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 increase in other short-term
borrowings
17.6
21.7
Cash dividends paid
(216.6
)
(192.0
)
Purchases of treasury stock
(238.4
)
(284.1
)
Proceeds from stock purchase and option
plans
51.4
55.5
Other
(23.4
)
(24.1
)
Net cash used by financing
activities
(409.4
)
(502.2
)
Effect of exchange rate changes on cash
and cash equivalents
0.5
(3.2
)
Increase in cash and cash
equivalents
43.6
48.9
Cash and cash equivalents at beginning of
year
140.9
92.0
Cash and cash equivalents at end of
year
$
184.5
$
140.9
Supplemental cash flow
disclosures:
Cash paid for interest
$
(46.3
)
$
(51.5
)
Net cash paid for income taxes
(191.2
)
(188.0
)
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
Fourth Quarter
Fourth Quarter
2019
2018
2019
2018
Net sales
$
955.2
$
952.5
$
—
$
—
Cost of goods sold
(504.7
)
(495.1
)
—
—
Gross profit
450.5
457.4
—
—
Operating expenses
(279.1
)
(275.3
)
—
—
Operating earnings before financial
services
171.4
182.1
—
—
Financial services revenue
—
—
83.9
82.7
Financial services expenses
—
—
(21.7
)
(26.6
)
Operating earnings from financial
services
—
—
62.2
56.1
Operating earnings
171.4
182.1
62.2
56.1
Interest expense
(12.1
)
(12.4
)
—
—
Intersegment interest income (expense) –
net
17.7
16.8
(17.7
)
(16.8
)
Other income (expense) – net
2.4
3.0
—
—
Earnings before income taxes and equity
earnings
179.4
189.5
44.5
39.3
Income tax expense
(37.5
)
(39.4
)
(11.4
)
(10.1
)
Earnings before equity earnings
141.9
150.1
33.1
29.2
Financial services – net earnings
attributable to Snap-on
33.1
29.2
—
—
Equity earnings, net of tax
—
—
—
—
Net earnings
175.0
179.3
33.1
29.2
Net earnings attributable to
noncontrolling interests
(4.4
)
(4.3
)
—
—
Net earnings attributable to
Snap-on
$
170.6
$
175.0
$
33.1
$
29.2
* 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
Full Year
Full Year
2019
2018
2019
2018
Net sales
$
3,730.0
$
3,740.7
$
—
$
—
Cost of goods sold
(1,886.0
)
(1,870.7
)
—
—
Gross profit
1,844.0
1,870.0
—
—
Operating expenses
(1,127.6
)
(1,144.0
)
—
—
Operating earnings before financial
services
716.4
726.0
—
—
Financial services revenue
—
—
337.7
329.7
Financial services expenses
—
—
(91.8
)
(99.6
)
Operating earnings from financial
services
—
—
245.9
230.1
Operating earnings
716.4
726.0
245.9
230.1
Interest expense
(48.8
)
(50.1
)
(0.2
)
(0.3
)
Intersegment interest income (expense) –
net
70.5
69.7
(70.5
)
(69.7
)
Other income (expense) – net
8.9
4.1
(0.1
)
0.1
Earnings before income taxes and equity
earnings
747.0
749.7
175.1
160.2
Income tax expense
(166.6
)
(173.1
)
(45.2
)
(41.3
)
Earnings before equity earnings
580.4
576.6
129.9
118.9
Financial services – net earnings
attributable to Snap-on
129.9
118.9
—
—
Equity earnings, net of tax
0.9
0.7
—
—
Net earnings
711.2
696.2
129.9
118.9
Net earnings attributable to
noncontrolling interests
(17.7
)
(16.3
)
—
—
Net earnings attributable to
Snap-on
$
693.5
$
679.9
$
129.9
$
118.9
* 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
Fiscal Year End
Fiscal Year End
2019
2018
2019
2018
Assets
Cash and cash equivalents
$
184.4
$
140.5
$
0.1
$
0.4
Intersegment receivables
14.2
15.1
—
—
Trade and other accounts receivable –
net
693.5
692.1
1.1
0.5
Finance receivables – net
—
—
530.1
518.5
Contract receivables – net
6.8
6.6
93.9
91.7
Inventories – net
760.4
673.8
—
—
Prepaid expenses and other assets
111.8
100.2
7.0
0.5
Total current assets
1,771.1
1,628.3
632.2
611.6
Property and equipment – net
519.8
493.5
1.7
1.6
Operating lease right-of-use assets
52.9
—
2.7
—
Investment in Financial Services
340.5
329.5
—
—
Deferred income tax assets
32.7
45.8
19.6
18.9
Intersegment long-term notes
receivable
755.5
701.3
—
—
Long-term finance receivables – net
—
—
1,103.5
1,074.4
Long-term contract receivables – net
16.0
11.9
344.1
333.0
Goodwill
913.8
902.2
—
—
Other intangibles – net
243.9
232.9
—
—
Other assets
73.0
51.9
0.2
0.1
Total assets
$
4,719.2
$
4,397.3
$
2,104.0
$
2,039.6
Liabilities and Equity
Notes payable
$
202.9
$
186.3
$
—
$
—
Accounts payable
197.3
199.6
1.2
1.5
Intersegment payables
—
—
14.2
15.1
Accrued benefits
53.2
52.0
0.1
—
Accrued compensation
52.2
66.8
1.7
4.7
Franchisee deposits
68.2
67.5
—
—
Other accrued liabilities
353.7
355.4
25.7
26.1
Total current liabilities
927.5
927.6
42.9
47.4
Long-term debt and intersegment long-term
debt
—
—
1,702.4
1,647.3
Deferred income tax liabilities
69.3
41.4
—
—
Retiree health care benefits
33.6
31.8
—
—
Pension liabilities
122.1
171.3
—
—
Operating lease liabilities
34.5
—
3.0
—
Other long-term liabilities
101.4
106.6
15.2
15.4
Total liabilities
1,288.4
1,278.7
1,763.5
1,710.1
Total shareholders' equity attributable
to Snap-on
3,409.1
3,098.8
340.5
329.5
Noncontrolling interests
21.7
19.8
—
—
Total equity
3,430.8
3,118.6
340.5
329.5
Total liabilities and equity
$
4,719.2
$
4,397.3
$
2,104.0
$
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)
Fourth Quarter
Full Year
2019
2018
2019
2018
AS
REPORTED
Benefits related to the settlement of
litigation matters ("legal settlements")
Pre-tax legal settlements
$
—
$
4.3
$
11.6
$
4.3
Income tax expense
—
(1.1
)
(2.9
)
(1.1
)
Legal settlements, after tax
$
—
$
3.2
$
8.7
$
3.2
Weighted-average shares outstanding -
diluted
55.4
56.6
55.9
57.3
Diluted EPS - legal settlements
$
—
$
0.06
$
0.15
$
0.06
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
55.4
56.6
55.9
57.3
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
55.4
56.6
55.9
57.3
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
55.4
56.6
55.9
57.3
Diluted EPS - net debt items
$
—
$
—
$
—
$
0.07
Adjustments related to implementation
of tax legislation ("tax charge")
Tax charge
$
—
$
—
$
—
$
(3.9
)
Weighted-average shares outstanding -
diluted
55.4
56.6
55.9
57.3
Diluted EPS - tax charge
$
—
$
—
$
—
$
(0.07
)
SNAP-ON INCORPORATED
Reconciliation of Non-GAAP
Financial Measures (continued)
(Amounts in millions, except
per share data)
(unaudited)
Fourth Quarter
Full Year
2019
2018
2019
2018
ADJUSTED INFORMATION - NON-GAAP
1)
Operating earnings before financial
services
As reported
$
171.4
$
182.1
$
716.4
$
726.0
Legal settlements
—
(4.3)
(11.6)
(4.3)
As adjusted
$
171.4
$
177.8
$
704.8
$
721.7
Operating earnings before financial
services as a percentage of sales
As reported
17.9
%
19.1
%
19.2
%
19.4
%
As adjusted
17.9
%
18.7
%
18.9
%
19.3
%
2)
Operating earnings
As reported
$
233.6
$
238.2
$
962.3
$
956.1
Legal settlements
—
(4.3)
(11.6)
(4.3)
As adjusted
$
233.6
$
233.9
$
950.7
$
951.8
Operating earnings as a percentage of
revenue
As reported
22.5
%
23.0
%
23.7
%
23.5
%
As adjusted
22.5
%
22.6
%
23.4
%
23.4
%
3)
Net earnings attributable to Snap-on
Incorporated
As reported
$
170.6
$
175.0
$
693.5
$
679.9
Legal settlements, after tax
—
(3.2)
(8.7)
(3.2)
Net debt items, after tax
—
—
—
(4.1)
Tax charge
—
—
—
3.9
As adjusted
$
170.6
$
171.8
$
684.8
$
676.5
4)
Diluted EPS
As reported
$
3.08
$
3.09
$
12.41
$
11.87
Legal settlements, after tax
—
(0.06)
(0.15)
(0.06)
Net debt items, after tax
—
—
—
(0.07)
Tax charge
—
—
—
0.07
As adjusted
$
3.08
$
3.03
$
12.26
$
11.81
5)
Effective tax rate
As reported
22.3
%
22.0
%
23.4
%
24.0
%
Tax charge
—
—
—
-0.5
%
As adjusted
22.3
%
22.0
%
23.4
%
23.5
%
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version on businesswire.com: https://www.businesswire.com/news/home/20200206005224/en/
Investors: Sara Verbsky 262/656-4869
Media: Samuel Bottum 262/656-5793
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