Sales of $1,183.0 million up 7.8% from Q1
2022, organic sales up 10.2%;
Operating margin before financial services
of 22.0% improves 170 basis points;
Diluted EPS of $4.60 increases 15.0% from Q1
2022
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 first
quarter of 2023.
- Net sales of $1,183.0 million in the first quarter of 2023
represented an increase of $85.2 million, or 7.8%, from 2022
levels, reflecting a $109.2 million, or 10.2%, organic sales gain,
partially offset by $24.0 million of unfavorable foreign currency
translation.
- Operating earnings before financial services for the quarter of
$259.8 million compared to $223.1 million in 2022. As a percentage
of net sales, operating earnings before financial services of 22.0%
in the first quarter improved 170 basis points from 20.3% last
year.
- Financial services revenue in the quarter of $92.6 million
compared to $87.7 million in 2022; financial services operating
earnings of $66.3 million compared to $70.4 million last year.
- Consolidated operating earnings for the quarter of $326.1
million, or 25.6% of revenues (net sales plus financial services
revenue), compared to $293.5 million, or 24.8% of revenues, last
year.
- The first quarter effective income tax rate was 23.1% in 2023
and 23.7% in 2022.
- Net earnings in the quarter of $248.7 million, or $4.60 per
diluted share, compared to net earnings of $217.4 million, or $4.00
per diluted share, a year ago.
See “Non-GAAP Measures” below for a definition of, and further
explanation about, organic sales.
“We’re again encouraged by our performance, achieved against the
general uncertainty and turbulence of these times. Our results
validate the extraordinary resilience of our critical markets and
demonstrate the ongoing and upward momentum present across our
operations,” said Nick Pinchuk, Snap-on chairman and chief
executive officer. “Our experienced and capable team overcame the
difficulties of the day, further building our strategic and
tactical advantages in our product and in our brand, all while
maintaining our established trajectory of continuing progress. We
believe our quarter is clear testimony to the abundant
opportunities along our runways for growth. Our businesses serving
critical industries are well positioned to extend our activities
outside the garage, and within automotive repair, we are poised to
sustain our advance in that robust market, by enhancing the van
channel and expanding with repair shop owners and managers. At the
same time, we believe the period confirms the power of our Snap-on
Value Creation Processes and our considerable capacity for
improvement. Finally, I want to thank our franchisees and our
associates worldwide for their valuable contributions, for their
steadfast dedication, and for their unfailing confidence in our
future.”
Segment Results
Commercial & Industrial Group segment sales of $363.8
million in the quarter compared to $340.1 million last year,
reflecting a $36.2 million, or 11.1%, organic sales gain, partially
offset by $12.5 million of unfavorable foreign currency
translation. The organic increase is primarily due to gains in
sales to customers in critical industries, as well as higher
activity in the segment’s specialty tools and European-based hand
tools businesses.
Operating earnings of $55.8 million in the period, including
$2.0 million of unfavorable foreign currency effects, compared to
$45.7 million in 2022. The operating margin (operating earnings as
a percentage of segment sales) of 15.3% improved 190 basis points
from 13.4% last year.
Snap-on Tools Group segment sales of $537.0 million in
the quarter compared to $512.1 million last year, reflecting a
$32.0 million, or 6.3%, organic sales gain, partially offset by
$7.1 million of unfavorable foreign currency translation. The
organic increase is primarily due to higher sales in the U.S.
franchise operations.
Operating earnings of $131.7 million in the period, including
$6.1 million of unfavorable foreign currency effects, compared to
$116.0 million in 2022. The operating margin of 24.5% improved 180
basis points from 22.7% last year.
Repair Systems & Information Group segment sales of
$446.6 million in the quarter compared to $398.2 million last year,
reflecting a $54.4 million, or 13.9%, organic sales increase,
partially offset by $6.0 million of unfavorable foreign currency
translation. The organic gain includes increased sales of undercar
equipment, higher activity with OEM dealerships, and higher sales
of diagnostic and repair information products to independent repair
shop owners and managers.
Operating earnings of $104.6 million in the period, including
$0.5 million of favorable foreign currency effects, compared to
$91.6 million in 2022. The operating margin of 23.4% compared to
23.0% a year ago.
Financial Services operating earnings of $66.3 million on
revenue of $92.6 million in the quarter compared to operating
earnings of $70.4 million on revenue of $87.7 million a year ago.
Originations of $300.9 million in the first quarter increased $55.3
million, or 22.5%, from 2022 levels.
Corporate expenses in the first quarter of $32.3 million
compared to $30.2 million last year.
Outlook
We believe that our markets and our operations possess and have
demonstrated continuing and considerable resilience against the
uncertainties of the current environment. In 2023, Snap-on expects
to make ongoing progress 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, it is
projected that capital expenditures in 2023 will approximate $100
million, of which $23.0 million was incurred in the first three
months of the year.
Snap-on currently anticipates that its full year 2023 effective
income tax rate will be in the range of 23% to 24%.
Conference Call and Webcast on April
20, 2023, at 9:00 a.m. Central Time
A discussion of this release will be webcast on Thursday, April
20, 2023, 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 release 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, expanded customer base, geographic expansion,
new product development and pricing changes, and excludes sales
contributions from acquired operations the company did not own as
of the comparable prior-year reporting period. Organic sales 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 the company’s businesses and
facilitates comparisons of its sales performance with prior
periods.
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 including those working in vehicle repair,
aerospace, the military, natural resources, and manufacturing. From
its founding in 1920, Snap-on has been recognized as the mark of
the serious and the outward sign of the pride and dignity working
men and women take in their professions. Products and services are
sold through the company’s network of widely recognized franchisee
vans, as well as through direct and distributor channels, under a
variety of notable brands. The company also provides financing
programs to facilitate the sales of its products and to support its
franchise business. Snap-on, an S&P 500 company, generated
sales of $4.5 billion in 2022, and is 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 31, 2022, 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
April 1,
April 2,
2023
2022
Net sales
$
1,183.0
$
1,097.8
Cost of goods sold
(593.4
)
(563.5
)
Gross profit
589.6
534.3
Operating expenses
(329.8
)
(311.2
)
Operating earnings before financial
services
259.8
223.1
Financial services revenue
92.6
87.7
Financial services expenses
(26.3
)
(17.3
)
Operating earnings from financial
services
66.3
70.4
Operating earnings
326.1
293.5
Interest expense
(12.4
)
(11.6
)
Other income (expense) – net
15.2
8.3
Earnings before income taxes
328.9
290.2
Income tax expense
(74.6
)
(67.5
)
Net earnings
254.3
222.7
Net earnings attributable to
noncontrolling interests
(5.6
)
(5.3
)
Net earnings attributable to Snap-on
Inc.
$
248.7
$
217.4
Net earnings per share attributable to
Snap-on Inc.:
Basic
$
4.69
$
4.07
Diluted
4.60
4.00
Weighted-average shares
outstanding:
Basic
53.0
53.4
Effect of dilutive securities
1.1
0.9
Diluted
54.1
54.3
SNAP-ON INCORPORATED
Supplemental Segment
Information
(Amounts in millions)
(unaudited)
Three Months Ended
April 1,
April 2,
2023
2022
Net sales:
Commercial & Industrial Group
$
363.8
$
340.1
Snap-on Tools Group
537.0
512.1
Repair Systems & Information Group
446.6
398.2
Segment net sales
1,347.4
1,250.4
Intersegment eliminations
(164.4
)
(152.6
)
Total net sales
1,183.0
1,097.8
Financial Services revenue
92.6
87.7
Total revenues
$
1,275.6
$
1,185.5
Operating earnings:
Commercial & Industrial Group
$
55.8
$
45.7
Snap-on Tools Group
131.7
116.0
Repair Systems & Information Group
104.6
91.6
Financial Services
66.3
70.4
Segment operating earnings
358.4
323.7
Corporate
(32.3
)
(30.2
)
Operating earnings
326.1
293.5
Interest expense
(12.4
)
(11.6
)
Other income (expense) – net
15.2
8.3
Earnings before income taxes
$
328.9
$
290.2
SNAP-ON INCORPORATED
Condensed Consolidated Balance
Sheets
(Amounts in millions)
(unaudited)
April 1,
December 31,
2023
2022
Assets
Cash and cash equivalents
$
833.8
$
757.2
Trade and other accounts receivable –
net
782.4
761.7
Finance receivables – net
572.1
562.2
Contract receivables – net
105.8
109.9
Inventories – net
1,049.1
1,033.1
Prepaid expenses and other assets
138.0
144.8
Total current assets
3,481.2
3,368.9
Property and equipment – net
516.3
512.6
Operating lease right-of-use assets
61.5
61.5
Deferred income tax assets
73.1
70.0
Long-term finance receivables – net
1,197.1
1,170.8
Long-term contract receivables – net
387.8
383.8
Goodwill
1,050.6
1,045.3
Other intangibles – net
273.3
275.6
Pension assets
71.8
70.6
Other assets
12.9
13.7
Total assets
$
7,125.6
$
6,972.8
Liabilities and Equity
Notes payable
$
18.2
$
17.2
Accounts payable
283.1
287.0
Accrued benefits
65.3
58.6
Accrued compensation
68.6
98.6
Franchisee deposits
72.5
73.8
Other accrued liabilities
491.3
436.4
Total current liabilities
999.0
971.6
Long-term debt
1,184.0
1,183.8
Deferred income tax liabilities
85.3
82.1
Retiree health care benefits
22.9
23.4
Pension liabilities
72.7
78.6
Operating lease liabilities
44.9
44.7
Other long-term liabilities
84.4
85.1
Total liabilities
2,493.2
2,469.3
Equity
Shareholders' equity attributable to
Snap-on Inc.
Common stock
67.5
67.4
Additional paid-in capital
500.2
499.9
Retained earnings
6,458.1
6,296.2
Accumulated other comprehensive loss
(510.6
)
(528.3
)
Treasury stock at cost
(1,905.0
)
(1,853.9
)
Total shareholders' equity attributable
to Snap-on Inc.
4,610.2
4,481.3
Noncontrolling interests
22.2
22.2
Total equity
4,632.4
4,503.5
Total liabilities and equity
$
7,125.6
$
6,972.8
SNAP-ON INCORPORATED
Condensed Consolidated
Statements of Cash Flows
(Amounts in millions)
(unaudited)
Three Months Ended
April 1,
April 2,
2023
2022
Operating activities:
Net earnings
$
254.3
$
222.7
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation
18.0
18.5
Amortization of other intangibles
6.9
7.2
Provision for losses on finance
receivables
14.2
6.3
Provision for losses on non-finance
receivables
5.0
3.8
Stock-based compensation expense
10.2
9.0
Deferred income tax provision
(benefit)
(0.2
)
2.3
Gain on sales of assets
(0.2
)
(2.7
)
Changes in operating assets and
liabilities:
Trade and other accounts receivable
(22.9
)
(53.1
)
Contract receivables
0.2
9.7
Inventories
(13.2
)
(61.7
)
Prepaid expenses and other assets
1.7
1.9
Accounts payable
(0.5
)
24.1
Accruals and other liabilities
28.1
5.9
Net cash provided by operating
activities
301.6
193.9
Investing activities:
Additions to finance receivables
(257.1
)
(205.5
)
Collections of finance receivables
207.5
215.6
Capital expenditures
(23.0
)
(20.2
)
Disposals of property and equipment
0.5
3.8
Other
(0.8
)
(0.3
)
Net cash used by investing
activities
(72.9
)
(6.6
)
Financing activities:
Net increase in other short-term
borrowings
0.8
2.3
Cash dividends paid
(86.1
)
(75.7
)
Purchases of treasury stock
(87.2
)
(28.8
)
Proceeds from stock purchase and option
plans
32.8
5.8
Other
(12.4
)
(9.9
)
Net cash used by financing
activities
(152.1
)
(106.3
)
Effect of exchange rate changes on cash
and cash equivalents
—
0.1
Increase in cash and cash
equivalents
76.6
81.1
Cash and cash equivalents at beginning of
year
757.2
780.0
Cash and cash equivalents at end of
period
$
833.8
$
861.1
Supplemental cash flow
disclosures:
Cash paid for interest
$
(13.6
)
$
(13.8
)
Net cash paid for income taxes
(13.3
)
(18.0
)
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 presented 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 are 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
April 1,
April 2,
April 1,
April 2,
2023
2022
2023
2022
Net sales
$
1,183.0
$
1,097.8
$
—
$
—
Cost of goods sold
(593.4
)
(563.5
)
—
—
Gross profit
589.6
534.3
—
—
Operating expenses
(329.8
)
(311.2
)
—
—
Operating earnings before financial
services
259.8
223.1
—
—
Financial services revenue
—
—
92.6
87.7
Financial services expenses
—
—
(26.3
)
(17.3
)
Operating earnings from financial
services
—
—
66.3
70.4
Operating earnings
259.8
223.1
66.3
70.4
Interest expense
(12.4
)
(11.6
)
—
—
Intersegment interest income (expense) –
net
15.7
14.9
(15.7
)
(14.9
)
Other income (expense) – net
15.2
8.3
—
—
Earnings before income taxes and equity
earnings
278.3
234.7
50.6
55.5
Income tax expense
(61.5
)
(53.2
)
(13.1
)
(14.3
)
Earnings before equity earnings
216.8
181.5
37.5
41.2
Financial services – net earnings
attributable to Snap-on
37.5
41.2
—
—
Net earnings
254.3
222.7
37.5
41.2
Net earnings attributable to
noncontrolling interests
(5.6
)
(5.3
)
—
—
Net earnings attributable to
Snap-on
$
248.7
$
217.4
$
37.5
$
41.2
* Snap-on with Financial Services
presented on the equity method.
SNAP-ON INCORPORATED
Non-GAAP Supplemental
Consolidating Data - Supplemental Condensed Balance Sheets
(Amounts in millions)
(unaudited)
Operations*
Financial Services
April 1,
December 31,
April 1,
December 31,
2023
2022
2023
2022
Assets
Cash and cash equivalents
$
833.4
$
757.1
$
0.4
$
0.1
Intersegment receivables
20.1
13.4
—
—
Trade and other accounts receivable –
net
781.2
761.1
1.2
0.6
Finance receivables – net
—
—
572.1
562.2
Contract receivables – net
5.8
5.9
100.0
104.0
Inventories – net
1,049.1
1,033.1
—
—
Prepaid expenses and other assets
142.7
149.2
6.0
5.8
Total current assets
2,832.3
2,719.8
679.7
672.7
Property and equipment – net
513.6
510.7
2.7
1.9
Operating lease right-of-use assets
60.2
60.1
1.3
1.4
Investment in Financial Services
367.7
363.9
—
—
Deferred income tax assets
51.1
48.4
22.0
21.6
Intersegment long-term notes
receivable
654.3
635.9
—
—
Long-term finance receivables – net
—
—
1,197.1
1,170.8
Long-term contract receivables – net
9.5
9.6
378.3
374.2
Goodwill
1,050.6
1,045.3
—
—
Other intangibles – net
273.3
275.6
—
—
Pension assets
71.8
70.6
—
—
Other assets
27.0
27.1
0.1
0.1
Total assets
$
5,911.4
$
5,767.0
$
2,281.2
$
2,242.7
Liabilities and Equity
Notes payable
$
18.2
$
17.2
$
—
$
—
Accounts payable
281.3
285.8
1.8
1.2
Intersegment payables
—
—
20.1
13.4
Accrued benefits
65.3
58.6
—
—
Accrued compensation
66.8
95.6
1.8
3.0
Franchisee deposits
72.5
73.8
—
—
Other accrued liabilities
466.7
420.8
35.3
25.8
Total current liabilities
970.8
951.8
59.0
43.4
Long-term debt and intersegment long-term
debt
—
—
1,838.3
1,819.7
Deferred income tax liabilities
85.3
82.1
—
—
Retiree health care benefits
22.9
23.4
—
—
Pension liabilities
72.7
78.6
—
—
Operating lease liabilities
43.9
43.6
1.0
1.1
Other long-term liabilities
83.4
84.0
15.2
14.6
Total liabilities
1,279.0
1,263.5
1,913.5
1,878.8
Total shareholders' equity attributable
to Snap-on
4,610.2
4,481.3
367.7
363.9
Noncontrolling interests
22.2
22.2
—
—
Total equity
4,632.4
4,503.5
367.7
363.9
Total liabilities and equity
$
5,911.4
$
5,767.0
$
2,281.2
$
2,242.7
* Snap-on with Financial Services
presented on the equity method.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230420005247/en/
Investors: Sara Verbsky 262/656-4869
Media: Samuel Bottum 262/656-5793
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