Net sales of $724.3 million;
Reported diluted EPS of $1.85;
Excluding restructuring charges, adjusted
diluted EPS of $1.91;
Sequential monthly improvements within the
quarter
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 2020.
- Net sales of $724.3 million in the second quarter of 2020
decreased $227.0 million, or 23.9% from 2019 levels, reflecting a
$214.9 million, or 22.9%, organic sales decline, $14.4 million of
unfavorable foreign currency translation, and $2.3 million of
acquisition-related sales. The lower sales volume is primarily due
to the impact of the COVID-19 pandemic.
- Operating earnings before financial services for the quarter of
$91.1 million, or 12.6% of sales, including $5.8 million of direct
costs associated with COVID-19, $4.0 million of exit and disposal
costs (“restructuring charges”) for actions outside of the United
States and $3.8 million of unfavorable foreign currency effects,
compared to $189.9 million, or 20.0% of sales last year. Excluding
the restructuring charges in 2020, operating earnings before
financial services, as adjusted, of $95.1 million, or 13.1% of
sales, decreased $94.8 million, or 49.9%, from 2019 levels.
- Financial services revenue in the quarter of $84.6 million
increased $0.5 million from 2019 levels; financial services
operating earnings of $57.6 million compared to $60.6 million last
year.
- Consolidated operating earnings for the quarter of $148.7
million, including $5.8 million of direct COVID-19-related costs,
$4.0 million of restructuring charges and $4.1 million of
unfavorable currency effects, compared to $250.5 million last year.
As a percentage of revenues (net sales plus financial services
revenue), consolidated operating earnings were 18.4% and 24.2% in
the second quarters of 2020 and 2019, respectively. Excluding the
restructuring charges in 2020, consolidated operating earnings, as
adjusted, of $152.7 million, or 18.9% of revenues, decreased $97.8
million, or 39.0%, from 2019 levels.
- The second quarter effective income tax rate of 24.1% in 2020
was increased by 20 basis points (100 basis points “bps” equals 1.0
percent) as a result of the restructuring charges. The second
quarter effective income tax rate was 23.6% in 2019.
- Reported net earnings in the second quarter of 2020 of $101.2
million, or $1.85 per diluted share, compared to $180.4 million, or
$3.22 per diluted share, a year ago. Excluding the restructuring
charges, net earnings, as adjusted, were $104.5 million in 2020, or
$1.91 per diluted share.
See “Non-GAAP Measures” below for a definition of, and further
explanation about, organic sales and measures, as adjusted,
excluding the restructuring charges.
“Throughout the second quarter, our sales and earnings were
adversely impacted by the COVID-19 pandemic,” said Nick Pinchuk,
Snap-on chairman and chief executive officer. “We believe the
effects of the virus can be represented in three phases: shock, or
the significant stress associated with the early days;
accommodation, or the gradual improvement reflecting the
development of tactics to proceed safely in the COVID-19
environment; and finally, psychological recovery, or the
restoration of confidence in the future. In fact, we encountered
that trend as we moved from the shock of April to the accommodation
reflected by the narrowing sales declines of May and June. During
these times of turbulence, we continue to prioritize the health,
safety and well-being of our associates, franchisees, customers and
communities as we engage in our essential work. At the same time,
we endeavor to strengthen our powerful product lines, reinforce our
extraordinary brands, and maintain our capable team, preserving
these advantages to pursue the abundant opportunities we believe
will be available as the virus clears. Finally, and especially in
the current situation, I want to thank our franchisees and
associates worldwide for their many contributions, continued
dedication, and belief in our future.”
Segment Results
Commercial & Industrial Group segment net sales of
$261.9 million in the quarter compared to $335.0 million last year,
reflecting a $66.2 million, or 20.2%, organic sales decline and
$6.9 million of unfavorable foreign currency translation. The
organic decrease includes mid-teen declines in sales to customers
in critical industries and in the power tools operation.
Operating earnings of $22.9 million in the period, including
$3.0 million of COVID-19-related costs, $2.0 million of
restructuring costs and $1.9 million of unfavorable foreign
currency effects, compared to $48.9 million in 2019. The operating
margin (operating earnings as a percentage of segment net sales) of
8.7% decreased from 14.6% a year ago, primarily reflecting the
effects of the decreased sales volumes and lower utilization of
manufacturing capacity, as well as 120 bps of COVID-19-related
costs, 80 bps of restructuring charges and 50 bps of unfavorable
foreign currency effects.
Snap-on Tools Group segment net sales of $323.3 million
in the quarter compared to $405.8 million last year, reflecting a
$79.2 million, or 19.7%, organic sales decline and $3.3 million of
unfavorable foreign currency translation. The organic sales
decrease includes a mid-teen decline in the United States and a
nearly 40% decline in the segment’s international operations.
Operating earnings of $38.4 million in the period, including
$1.9 million of COVID-19-related costs, $0.6 million of
restructuring charges and $1.1 million of unfavorable foreign
currency effects, compared to $71.3 million in 2019. The operating
margin of 11.9% decreased from 17.6% a year ago, primarily due to
the lower sales volumes and costs to maintain manufacturing
capacity, as well as 60 bps of COVID-19-related costs, 20 bps of
restructuring charges and 20 bps of unfavorable foreign currency
effects.
Repair Systems & Information Group segment net sales
of $245.0 million in the quarter compared to $348.9 million last
year, reflecting a $101.4 million, or 29.5%, organic sales
decrease, $4.8 million of unfavorable foreign currency translation,
and $2.3 million of acquisition-related sales. The organic decrease
includes declines of over 30% in both sales of undercar equipment
and to OEM dealerships, as well as a mid-teen decrease in sales of
diagnostic and repair information products to independent repair
shop owners and managers.
Operating earnings of $50.6 million in the period, including
$1.4 million of restructuring charges, $0.7 million of
COVID-19-related costs and $0.8 million of unfavorable foreign
currency effects, compared to $88.6 million in 2019. The operating
margin of 20.7% decreased from 25.4% a year ago, primarily
reflecting the effects of the lower sales volume, as well as 50 bps
of restructuring charges and 20 bps of COVID-19-related costs.
Financial Services operating earnings of $57.6 million on
revenue of $84.6 million in the quarter compared to operating
earnings of $60.6 million on revenue of $84.1 million a year ago.
In the second quarter of 2020, financial services operating
earnings reflected higher provisions for credit losses as compared
to the prior year, which included lower provisions as a result of
non-recurring favorable loss experience in the second quarter of
2019. Originations of $255.8 million in the second quarter
decreased $7.6 million, or 2.9%, from 2019 levels.
Corporate expenses of $20.8 million in the second quarter
of 2020 compared to $18.9 million last year.
Outlook
COVID-19 has spread across the globe during 2020 and is
impacting economic activity worldwide. Snap-on experienced
improving trends in the second quarter as our operations learned to
accommodate the risks and safely pursue opportunities in the
COVID-19 environment. In the near term, the company believes there
will be continued sequential improvements, reflecting increasing
levels of accommodations to the virus-related turbulence, though it
cannot provide assurances on the rate of progress due to the
uncertain and evolving nature and duration of the pandemic.
Snap-on is responding to the global macroeconomic challenges by
deepening its Rapid Continuous Improvement (RCI), sourcing and
other cost reduction initiatives. Snap-on recorded $4.0 million and
$11.5 million of costs related to restructuring actions in the
second quarter and first six months of 2020, respectively. Snap-on
will continue to manage its cash flows and balance its capital
allocation priorities, including investments and the need for
further cost reduction actions; the COVID-19 pandemic makes it
difficult to presently predict this balance as the company
continually adjusts to the changing environment. Snap-on expects
that capital expenditures in 2020 will be in a range of $75 million
to $85 million, of which $29.0 million was incurred in the first
six months of the year.
Despite near term uncertainty, Snap-on expects to maintain focus
on 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.
Snap-on currently anticipates that its full year 2020 effective
income tax rate will be in the range of 23% to 25%.
Conference Call and Webcast on July 31,
2020, at 9:00 a.m. Central Time
A discussion of this release will be webcast on Friday, July 31,
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 second quarter of 2020, 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
$4.0 million of restructuring charges ($3.3 million after tax) for
exit and disposal activities.
For the six months ended June 27, 2020, 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
$11.5 million of restructuring charges ($9.3 million after tax) for
exit and disposal activities.
For the six months ended June 29, 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 a legal settlement that occurred in
the three months ended March 30, 2019.
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 2020
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 28, 2019 and any Quarterly
Reports on Form 10-Q, which all 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.
SNAP-ON INCORPORATED
Condensed Consolidated
Statements of Earnings
(Amounts in millions, except
per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net sales
$
724.3
$
951.3
$
1,576.5
$
1,873.0
Cost of goods sold
(383.1
)
(477.5
)
(813.7
)
(927.6
)
Gross profit
341.2
473.8
762.8
945.4
Operating expenses
(250.1
)
(283.9
)
(532.8
)
(568.1
)
Operating earnings before financial
services
91.1
189.9
230.0
377.3
Financial services revenue
84.6
84.1
170.5
169.7
Financial services expenses
(27.0
)
(23.5
)
(56.0
)
(47.0
)
Operating earnings from financial
services
57.6
60.6
114.5
122.7
Operating earnings
148.7
250.5
344.5
500.0
Interest expense
(13.4
)
(12.4
)
(24.8
)
(24.9
)
Other income (expense) – net
2.0
2.1
3.5
3.6
Earnings before income taxes and equity
earnings
137.3
240.2
323.2
478.7
Income tax expense
(31.9
)
(55.6
)
(75.8
)
(112.5
)
Earnings before equity earnings
105.4
184.6
247.4
366.2
Equity earnings, net of tax
0.5
0.3
0.5
0.8
Net earnings
105.9
184.9
247.9
367.0
Net earnings attributable to
noncontrolling interests
(4.7
)
(4.5
)
(9.5
)
(8.7
)
Net earnings attributable to Snap-on
Inc.
$
101.2
$
180.4
$
238.4
$
358.3
Net earnings per share attributable to
Snap-on Inc.:
Basic
$
1.86
$
3.27
$
4.37
$
6.47
Diluted
1.85
3.22
4.34
6.38
Weighted-average shares
outstanding:
Basic
54.4
55.2
54.5
55.4
Effect of dilutive securities
0.4
0.8
0.4
0.8
Diluted
54.8
56.0
54.9
56.2
SNAP-ON INCORPORATED
Supplemental Segment
Information
(Amounts in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net sales:
Commercial & Industrial Group
$
261.9
$
335.0
$
561.8
$
657.5
Snap-on Tools Group
323.3
405.8
699.2
816.0
Repair Systems & Information Group
245.0
348.9
559.6
676.8
Segment net sales
830.2
1,089.7
1,820.6
2,150.3
Intersegment eliminations
(105.9
)
(138.4
)
(244.1
)
(277.3
)
Total net sales
724.3
951.3
1,576.5
1,873.0
Financial Services revenue
84.6
84.1
170.5
169.7
Total revenues
$
808.9
$
1,035.4
$
1,747.0
$
2,042.7
Operating earnings:
Commercial & Industrial Group
$
22.9
$
48.9
$
54.4
$
95.4
Snap-on Tools Group
38.4
71.3
87.0
138.5
Repair Systems & Information Group
50.6
88.6
127.9
172.2
Financial Services
57.6
60.6
114.5
122.7
Segment operating earnings
169.5
269.4
383.8
528.8
Corporate
(20.8
)
(18.9
)
(39.3
)
(28.8
)
Operating earnings
148.7
250.5
344.5
500.0
Interest expense
(13.4
)
(12.4
)
(24.8
)
(24.9
)
Other income (expense) – net
2.0
2.1
3.5
3.6
Earnings before income taxes and equity
earnings
$
137.3
$
240.2
$
323.2
$
478.7
SNAP-ON INCORPORATED
Condensed Consolidated Balance
Sheets
(Amounts in millions)
(unaudited)
June 27,
December 28,
2020
2019
Assets
Cash and cash equivalents
$
686.2
$
184.5
Trade and other accounts receivable –
net
563.5
694.6
Finance receivables – net
508.5
530.1
Contract receivables – net
97.7
100.7
Inventories – net
784.0
760.4
Prepaid expenses and other assets
132.5
110.2
Total current assets
2,772.4
2,380.5
Property and equipment – net
509.4
521.5
Operating lease right-of-use assets
50.2
55.6
Deferred income tax assets
47.1
52.3
Long-term finance receivables – net
1,140.3
1,103.5
Long-term contract receivables – net
366.9
360.1
Goodwill
924.5
913.8
Other intangibles – net
241.0
243.9
Other assets
61.7
62.3
Total assets
$
6,113.5
$
5,693.5
Liabilities and Equity
Notes payable
$
12.1
$
202.9
Accounts payable
186.2
198.5
Accrued benefits
48.5
53.3
Accrued compensation
63.9
53.9
Franchisee deposits
83.3
68.2
Other accrued liabilities
435.4
370.8
Total current liabilities
829.4
947.6
Long-term debt
1,436.7
946.9
Deferred income tax liabilities
67.5
69.3
Retiree health care benefits
32.2
33.6
Pension liabilities
109.0
122.1
Operating lease liabilities
33.4
37.5
Other long-term liabilities
96.7
105.7
Total liabilities
2,604.9
2,262.7
Equity
Shareholders' equity attributable to
Snap-on Inc.
Common stock
67.4
67.4
Additional paid-in capital
383.1
379.1
Retained earnings
4,894.2
4,779.7
Accumulated other comprehensive loss
(514.4
)
(507.9
)
Treasury stock at cost
(1,343.6
)
(1,309.2
)
Total shareholders' equity attributable
to Snap-on Inc.
3,486.7
3,409.1
Noncontrolling interests
21.9
21.7
Total equity
3,508.6
3,430.8
Total liabilities and equity
$
6,113.5
$
5,693.5
SNAP-ON INCORPORATED
Condensed Consolidated
Statements of Cash Flows
(Amounts in millions)
(unaudited)
Three Months Ended
June 27,
June 29,
2020
2019
Operating activities:
Net earnings
$
105.9
$
184.9
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation
18.1
17.6
Amortization of other intangibles
5.7
5.4
Provision for losses on finance
receivables
15.1
11.9
Provision for losses on non-finance
receivables
6.7
3.7
Stock-based compensation expense
5.8
6.8
Deferred income tax provision
1.7
7.0
Loss on sales of assets
0.1
0.3
Settlement of treasury lock
1.4
—
Changes in operating assets and
liabilities, net of effects of acquisitions:
Trade and other accounts receivable
78.2
(10.9
)
Contract receivables
(13.0
)
(3.1
)
Inventories
(8.2
)
(19.6
)
Prepaid and other assets
(21.3
)
(7.3
)
Accounts payable
(10.0
)
14.8
Accruals and other liabilities
67.4
(66.0
)
Net cash provided by operating
activities
253.6
145.5
Investing activities:
Additions to finance receivables
(201.8
)
(220.6
)
Collections of finance receivables
166.8
191.6
Capital expenditures
(11.8
)
(28.0
)
Acquisitions of businesses, net of cash
acquired
—
(8.0
)
Disposals of property and equipment
0.9
0.2
Other
0.3
(0.4
)
Net cash used by investing
activities
(45.6
)
(65.2
)
Financing activities:
Proceeds from issuance of long-term
debt
489.9
—
Net increase (decrease) in other
short-term borrowings
(148.1
)
25.6
Cash dividends paid
(58.7
)
(52.5
)
Purchases of treasury stock
—
(60.1
)
Proceeds from stock purchase and option
plans
12.3
19.8
Other
(5.9
)
(5.9
)
Net cash provided (used) by financing
activities
289.5
(73.1
)
Effect of exchange rate changes on cash
and cash equivalents
2.9
0.4
Increase in cash and cash
equivalents
500.4
7.6
Cash and cash equivalents at beginning of
period
185.8
156.4
Cash and cash equivalents at end of
period
$
686.2
$
164.0
Supplemental cash flow
disclosures:
Cash paid for interest
$
(0.9
)
$
(1.8
)
Net cash paid for income taxes
(12.3
)
(73.8
)
SNAP-ON INCORPORATED
Condensed Consolidated
Statements of Cash Flows
(Amounts in millions)
(unaudited)
Six Months Ended
June 27,
June 29,
2020
2019
Operating activities:
Net earnings
$
247.9
$
367.0
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation
36.2
34.8
Amortization of other intangibles
11.4
10.8
Provision for losses on finance
receivables
31.4
24.4
Provision for losses on non-finance
receivables
11.7
8.7
Stock-based compensation expense
6.9
14.1
Deferred income tax provision
(benefit)
(1.9
)
12.4
Loss on sales of assets
0.2
0.6
Settlement of treasury lock
1.4
—
Changes in operating assets and
liabilities, net of effects of acquisitions:
Trade and other accounts receivable
112.5
3.9
Contract receivables
(11.8
)
3.0
Inventories
(32.0
)
(52.8
)
Prepaid and other assets
(18.1
)
(27.0
)
Accounts payable
(8.1
)
16.6
Accruals and other liabilities
79.3
(69.7
)
Net cash provided by operating
activities
467.0
346.8
Investing activities:
Additions to finance receivables
(414.6
)
(431.1
)
Collections of finance receivables
357.5
383.5
Capital expenditures
(29.0
)
(48.2
)
Acquisitions of businesses, net of cash
acquired
(6.1
)
(9.3
)
Disposals of property and equipment
0.9
0.4
Other
(4.1
)
0.8
Net cash used by investing
activities
(95.4
)
(103.9
)
Financing activities:
Proceeds from issuance of long-term
debt
489.9
—
Net decrease in other short-term
borrowings
(190.0
)
(18.2
)
Cash dividends paid
(117.7
)
(105.3
)
Purchases of treasury stock
(50.5
)
(107.5
)
Proceeds from stock purchase and option
plans
13.8
24.6
Other
(13.1
)
(14.3
)
Net cash provided (used) by financing
activities
132.4
(220.7
)
Effect of exchange rate changes on cash
and cash equivalents
(2.3
)
0.9
Increase in cash and cash
equivalents
501.7
23.1
Cash and cash equivalents at beginning of
year
184.5
140.9
Cash and cash equivalents at end of
period
$
686.2
$
164.0
Supplemental cash flow
disclosures:
Cash paid for interest
$
(21.6
)
$
(23.4
)
Net cash paid for income taxes
(27.4
)
(92.2
)
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 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net sales
$
724.3
$
951.3
$
—
$
—
Cost of goods sold
(383.1
)
(477.5
)
—
—
Gross profit
341.2
473.8
—
—
Operating expenses
(250.1
)
(283.9
)
—
—
Operating earnings before financial
services
91.1
189.9
—
—
Financial services revenue
—
—
84.6
84.1
Financial services expenses
—
—
(27.0
)
(23.5
)
Operating earnings from financial
services
—
—
57.6
60.6
Operating earnings
91.1
189.9
57.6
60.6
Interest expense
(13.4
)
(12.3
)
—
(0.1
)
Intersegment interest income (expense) –
net
16.5
17.8
(16.5
)
(17.8
)
Other income (expense) – net
2.0
2.1
—
—
Earnings before income taxes and equity
earnings
96.2
197.5
41.1
42.7
Income tax expense
(21.3
)
(44.5
)
(10.6
)
(11.1
)
Earnings before equity earnings
74.9
153.0
30.5
31.6
Financial services – net earnings
attributable to Snap-on
30.5
31.6
—
—
Equity earnings, net of tax
0.5
0.3
—
—
Net earnings
105.9
184.9
30.5
31.6
Net earnings attributable to
noncontrolling interests
(4.7
)
(4.5
)
—
—
Net earnings attributable to
Snap-on
$
101.2
$
180.4
$
30.5
$
31.6
* 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 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net sales
$
1,576.5
$
1,873.0
$
—
$
—
Cost of goods sold
(813.7
)
(927.6
)
—
—
Gross profit
762.8
945.4
—
—
Operating expenses
(532.8
)
(568.1
)
—
—
Operating earnings before financial
services
230.0
377.3
—
—
Financial services revenue
—
—
170.5
169.7
Financial services expenses
—
—
(56.0
)
(47.0
)
Operating earnings from financial
services
—
—
114.5
122.7
Operating earnings
230.0
377.3
114.5
122.7
Interest expense
(24.7
)
(24.8
)
(0.1
)
(0.1
)
Intersegment interest income (expense) –
net
34.6
35.5
(34.6
)
(35.5
)
Other income (expense) – net
3.5
3.6
—
—
Earnings before income taxes and equity
earnings
243.4
391.6
79.8
87.1
Income tax expense
(55.1
)
(89.9
)
(20.7
)
(22.6
)
Earnings before equity earnings
188.3
301.7
59.1
64.5
Financial services – net earnings
attributable to Snap-on
59.1
64.5
—
—
Equity earnings, net of tax
0.5
0.8
—
—
Net earnings
247.9
367.0
59.1
64.5
Net earnings attributable to
noncontrolling interests
(9.5
)
(8.7
)
—
—
Net earnings attributable to
Snap-on
$
238.4
$
358.3
$
59.1
$
64.5
* 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 27,
December 28,
June 27,
December 28,
2020
2019
2020
2019
Assets
Cash and cash equivalents
$
685.9
$
184.4
$
0.3
$
0.1
Intersegment receivables
13.6
14.2
—
—
Trade and other accounts receivable –
net
562.7
693.5
0.8
1.1
Finance receivables – net
—
—
508.5
530.1
Contract receivables – net
7.0
6.8
90.7
93.9
Inventories – net
784.0
760.4
—
—
Prepaid expenses and other assets
132.3
111.8
9.2
7.0
Total current assets
2,185.5
1,771.1
609.5
632.2
Property and equipment – net
507.8
519.8
1.6
1.7
Operating lease right-of-use assets
47.7
52.9
2.5
2.7
Investment in Financial Services
340.9
340.5
—
—
Deferred income tax assets
24.6
32.7
22.5
19.6
Intersegment long-term notes
receivable
267.8
755.5
—
—
Long-term finance receivables – net
—
—
1,140.3
1,103.5
Long-term contract receivables – net
14.3
16.0
352.6
344.1
Goodwill
924.5
913.8
—
—
Other intangibles – net
241.0
243.9
—
—
Other assets
73.5
73.0
0.2
0.2
Total assets
$
4,627.6
$
4,719.2
$
2,129.2
$
2,104.0
Liabilities and Equity
Notes payable
$
12.1
$
202.9
$
—
$
—
Accounts payable
184.7
197.3
1.5
1.2
Intersegment payables
—
—
13.6
14.2
Accrued benefits
48.5
53.2
—
0.1
Accrued compensation
61.1
52.2
2.8
1.7
Franchisee deposits
83.3
68.2
—
—
Other accrued liabilities
396.7
353.7
47.7
25.7
Total current liabilities
786.4
927.5
65.6
42.9
Long-term debt and intersegment long-term
debt
—
—
1,704.5
1,702.4
Deferred income tax liabilities
67.5
69.3
—
—
Retiree health care benefits
32.2
33.6
—
—
Pension liabilities
109.0
122.1
—
—
Operating lease liabilities
30.7
34.5
2.7
3.0
Other long-term liabilities
93.2
101.4
15.5
15.2
Total liabilities
1,119.0
1,288.4
1,788.3
1,763.5
Total shareholders' equity attributable
to Snap-on
3,486.7
3,409.1
340.9
340.5
Noncontrolling interests
21.9
21.7
—
—
Total equity
3,508.6
3,430.8
340.9
340.5
Total liabilities and equity
$
4,627.6
$
4,719.2
$
2,129.2
$
2,104.0
* 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 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
AS
REPORTED
Charges associated with exit and
disposal activities ("restructuring charges")
Pre-tax restructuring charges
$
(4.0
)
$
—
$
(11.5
)
$
—
Income tax benefits
0.7
—
2.2
—
Restructuring charges, after tax
$
(3.3
)
$
—
$
(9.3
)
$
—
Weighted-average shares outstanding -
diluted
54.8
56.0
54.9
56.2
Diluted EPS - restructuring
charges
$
(0.06
)
$
—
$
(0.17
)
$
—
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
54.8
56.0
54.9
56.2
Diluted EPS - legal settlement
$
—
$
—
$
—
$
0.15
ADJUSTED
INFORMATION - NON-GAAP
1) Operating earnings before financial
services
As reported
$
91.1
$
189.9
$
230.0
$
377.3
Restructuring charges
4.0
—
11.5
—
Legal settlement
—
—
—
(11.6
)
As adjusted
$
95.1
$
189.9
$
241.5
$
365.7
Operating earnings before financial
services as a percentage of sales
As reported
12.6
%
20.0
%
14.6
%
20.1
%
As adjusted
13.1
%
20.0
%
15.3
%
19.5
%
2) Operating earnings
As reported
$
148.7
$
250.5
$
344.5
$
500.0
Restructuring charges
4.0
—
11.5
—
Legal settlement
—
—
—
(11.6
)
As adjusted
$
152.7
$
250.5
$
356.0
$
488.4
Operating earnings as a percentage of
revenue
As reported
18.4
%
24.2
%
19.7
%
24.5
%
As adjusted
18.9
%
24.2
%
20.4
%
23.9
%
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 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
ADJUSTED
INFORMATION - NON-GAAP (continued)
3) Net earnings attributable to Snap-on
Incorporated
As reported
$
101.2
$
180.4
$
238.4
$
358.3
Restructuring charges, after tax
3.3
—
9.3
—
Legal settlement, after tax
—
—
—
(8.7
)
As adjusted
$
104.5
$
180.4
$
247.7
$
349.6
4) Diluted EPS
As reported
$
1.85
$
3.22
$
4.34
$
6.38
Restructuring charges, after tax
0.06
—
0.17
—
Legal settlement, after tax
—
—
—
(0.15
)
As adjusted
$
1.91
$
3.22
$
4.51
$
6.23
5) Effective tax rate
As reported
24.1
%
23.6
%
24.2
%
23.9
%
Restructuring charges
(0.2
)
%
—
%
(0.2
)
%
—
%
As adjusted
23.9
%
23.6
%
24.0
%
23.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200731005082/en/
For additional information, please visit www.snapon.com or
contact: Investors: Sara Verbsky 262/656-4869
Media: Samuel Bottum 262/656-5793
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