Snap-on Announces First Quarter 2013 Results

  Snap-on Announces First Quarter 2013 Results

                    Diluted EPS of $1.40 increases 15.7%;
 Operating earnings before financial services of 14.5% of sales improves 120
                                 basis points

Business Wire

KENOSHA, Wis. -- April 18, 2013

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 2013.

  *Sales of $741.7 million increased $6.5 million, or 0.9%, from 2012 levels;
    excluding $4.3 million of unfavorable foreign currency translation,
    organic sales increased 1.5%.
  *Operating earnings before financial services of $107.8 million improved to
    14.5% of sales as compared to $97.5 million, or 13.3% of sales, last year.
  *Financial services operating earnings of $30.5 million increased $6.6
    million from 2012 levels.
  *Consolidated operating earnings of $138.3 million improved to 17.6% of
    revenues (net sales plus financial services revenue) as compared to $121.4
    million, or 15.7% of revenues, last year.
  *Net earnings of $82.8 million, or $1.40 per diluted share, compares with
    net earnings of $71.0 million, or $1.21 per diluted share, a year ago.

“We’re encouraged with our first quarter performance, which included a
significant improvement in operating margin and a 15.7% increase in diluted
earnings per share, despite continuing headwinds that are impacting specific
areas of our business,” said Nick Pinchuk, Snap-on chairman and chief
executive officer. “We’re focused on our Snap-on Value Creation Processes and
are committed to our decisive strategic initiatives…enhancing the van
network…expanding with repair shop owners and managers…extending to critical
industries…and building in emerging markets. We believe it’s that effective
balance which, once again, has enabled progress along our runways for growth
and improvement, and has authored the positive performance evident in the
first quarter results. I thank our franchisees and associates for their
ongoing contributions. Without their capability, energy and dedication, these
results would not have been possible.”

Segment Results

Commercial & Industrial Group segment sales of $266.4 million in the quarter
decreased $20.1 million, or 7.0%, from 2012 levels primarily due to lower
sales to the military and in the segment’s European-based hand tools business
as a result of ongoing economic weakness in that region. Excluding $2.2
million of unfavorable foreign currency translation, organic sales in the
quarter decreased 6.3%.

Operating earnings of $30.6 million in the period increased $1.4 million, or
4.8%, from 2012 levels, and the operating margin (operating earnings as a
percentage of segment sales) of 11.5% improved from 10.2% a year ago.

Snap-on Tools Group segment sales of $327.3 million in the quarter rose $10.7
million, or 3.4%, from 2012 levels, reflecting sales gains across both the
company’s U.S. and international franchise operations. Excluding $0.9 million
of unfavorable foreign currency translation, organic sales increased 3.7%.

Operating earnings of $47.2 million in the period increased $1.1 million, or
2.4%, from 2012 levels and the operating margin of 14.4% compared with 14.6% a
year ago.

Repair Systems & Information Group segment sales of $246.1 million in the
quarter increased $20.0 million, or 8.8%, from 2012 levels primarily due to
higher sales to Original Equipment Manufacturer (OEM) dealerships and gains in
sales of diagnostics and repair information products to repair shop owners and
managers. Excluding $1.0 million of unfavorable foreign currency translation,
organic sales in the quarter rose 9.3%.

Operating earnings of $56.5 million in the period increased $7.9 million, or
16.3%, from 2012 levels and the operating margin of 23.0% increased from 21.5%
a year ago.

Financial Services operating earnings of $30.5 million on revenue of $44.0
million in the quarter compared with operating earnings of $23.9 million on
revenue of $38.0 million a year ago.

Corporate expenses of $26.5 million in the quarter compared with $26.4 million
last year.

Outlook

In 2013, Snap-on expects to continue with the advancement of its strategic
framework designed to enhance its mobile tool distribution network, expand in
the vehicle repair garage, extend to critical industries and build in emerging
markets. In pursuit of these initiatives, Snap-on continues to anticipate that
capital expenditures in 2013 will be in a range of $70 million to $80 million.
Snap-on also expects that its full year 2013 effective income tax rate will be
comparable to its 2012 rate.

Conference Call and Webcast April 18, 2013, at 9:00 a.m. Central Time

A discussion of this release will be webcast on Thursday, April 18, 2013, 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, including the accompanying slide
presentation, visit www.snapon.com/sna and click on the link toward the bottom
of the page. Additional detail about Snap-on is also available on the Snap-on
web site.

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. Products and services are sold through the company’s franchisee,
company-direct, distributor and internet channels. Founded in 1920, Snap-on is
a $2.9 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 contains 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, 2012, 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
                                                       March 30,    March 31,
                                                       2013         2012
                                                                    
Net sales                                              $ 741.7      $ 735.2
Cost of goods sold                                      (384.8 )    (387.5 )
Gross profit                                             356.9        347.7
Operating expenses                                      (249.1 )    (250.2 )
Operating earnings before financial services             107.8        97.5
                                                                    
Financial services revenue                               44.0         38.0
Financial services expenses                             (13.5  )    (14.1  )
Operating earnings from financial services              30.5       23.9   
                                                                    
Operating earnings                                       138.3        121.4
Interest expense                                         (13.6  )     (13.9  )
Other income (expense) – net                            (0.6   )    (0.4   )
Earnings before income taxes and equity earnings         124.1        107.1
(loss)
Income tax expense                                      (38.8  )    (35.2  )
Earnings before equity earnings (loss)                   85.3         71.9
Equity earnings (loss), net of tax                      (0.2   )    1.1    
Net earnings                                             85.1         73.0
Net earnings attributable to noncontrolling             (2.3   )    (2.0   )
interests
Net earnings attributable to Snap-on Inc.              $ 82.8      $ 71.0   
                                                                    
                                                                    
Net earnings per share attributable to Snap-on Inc.:
Basic                                                  $ 1.42       $ 1.22
Diluted                                                  1.40         1.21
                                                                    
Weighted-average shares outstanding:
Basic                                                    58.3         58.2
Effect of dilutive options                              0.9        0.6    
Diluted                                                 59.2       58.8   
                                                                             
                                                                             
                                                                             

SNAP-ON INCORPORATED
Supplemental Segment Information
(Amounts in millions)
(unaudited)
                                                                  
                                                         Three Months Ended
                                                         March 30,   March 31,
                                                         2013        2012
                                                                     
Net sales:
Commercial & Industrial Group                            $ 266.4     $ 286.5
Snap-on Tools Group                                        327.3       316.6
Repair Systems & Information Group                        246.1     226.1 
Segment net sales                                          839.8      829.2
Intersegment eliminations                                 (98.1 )    (94.0 )
Total net sales                                          $ 741.7     $ 735.2
Financial Services revenue                                44.0      38.0  
Total revenues                                           $ 785.7    $ 773.2 
                                                                     
Operating earnings:
Commercial & Industrial Group                            $ 30.6      $ 29.2
Snap-on Tools Group                                        47.2        46.1
Repair Systems & Information Group                         56.5        48.6
Financial Services                                        30.5      23.9  
Segment operating earnings                                 164.8      147.8
Corporate                                                 (26.5 )    (26.4 )
Operating earnings                                       $ 138.3     $ 121.4
Interest expense                                           (13.6 )     (13.9 )
Other income (expense) – net                              (0.6  )    (0.4  )
Earnings before income taxes and equity earnings         $ 124.1    $ 107.1 
(loss)
                                                                             
                                                                             
                                                                             

SNAP-ON INCORPORATED
Condensed Consolidated Balance Sheets
(Amounts in millions)
(unaudited)
                                                               
                                                    March 30,     December 29,
                                                    2013          2012
                                                                  
Assets
Cash and cash equivalents                           $ 213.6       $  214.5
Trade and other accounts receivable – net             500.2          497.9
Finance receivables – net                             329.3          323.1
Contract receivables – net                            58.6           62.7
Inventories – net                                     401.3          404.2
Deferred income tax assets                            73.1           81.8
Prepaid expenses and other assets                    99.7         84.8    
Total current assets                                  1,675.8        1,669.0
                                                                  
Property and equipment – net                          372.3          375.2
Deferred income tax assets                            107.2          110.4
Long-term finance receivables – net                   502.6          494.6
Long-term contract receivables – net                  201.6          194.4
Goodwill                                              800.3          807.4
Other intangibles – net                               185.5          187.2
Other assets                                         57.9         64.1    
Total assets                                        $ 3,903.2    $  3,902.3 
                                                                  
Liabilities and Equity
Notes payable and current maturities of long-term   $ 111.4       $  5.2
debt
Accounts payable                                      148.7          142.5
Accrued benefits                                      50.7           50.6
Accrued compensation                                  62.2           88.3
Franchisee deposits                                   51.5           54.7
Other accrued liabilities                            245.2        247.9   
Total current liabilities                             669.7          589.2
                                                                  
Long-term debt                                        868.0          970.4
Deferred income tax liabilities                       133.8          127.1
Retiree health care benefits                          47.2           48.4
Pension liabilities                                   252.9          260.7
Other long-term liabilities                          85.2         87.5    
Total liabilities                                    2,056.8      2,083.3 
                                                                  
Equity
Shareholders' equity attributable to Snap-on Inc.
Common stock                                          67.4           67.4
Additional paid-in capital                            203.1          204.6
Retained earnings                                     2,127.3        2,067.0
Accumulated other comprehensive loss                  (146.5  )      (124.2  )
Treasury stock at cost                               (421.8  )     (412.7  )
Total shareholders' equity attributable to            1,829.5        1,802.1
Snap-on Inc.
Noncontrolling interests                             16.9         16.9    
Total equity                                         1,846.4      1,819.0 
Total liabilities and equity                        $ 3,903.2    $  3,902.3 
                                                                             
                                                                             
                                                                             

SNAP-ON INCORPORATED
Condensed Consolidated Statements of Cash Flow
(Amounts in millions)
(unaudited)
                                                                 
                                                       Three Months Ended
                                                       March 30,    March 31,
                                                       2013         2012
                                                                    
Operating activities:
Net earnings                                           $ 85.1       $ 73.0
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation                                             12.5         12.6
Amortization of other intangibles                        6.3          6.4
Provision for losses on finance receivables              3.9          3.9
Provision for losses on non-finance receivables          4.1          2.8
Stock-based compensation expense                         9.5          8.7
Excess tax benefits from stock-based compensation        (4.0   )     (2.0   )
Deferred income tax provision                            14.4         13.4
Gain on sale of assets                                   (0.1   )     (0.8   )
Changes in operating assets and liabilities:
(Increase) decrease in trade and other accounts          (12.3  )     3.0
receivable
Increase in contract receivables                         (6.5   )     (4.2   )
Increase in inventories                                  (3.1   )     (4.1   )
Increase in prepaid and other assets                     (9.3   )     (20.4  )
Increase in accounts payable                             9.9          15.0
Decrease in accruals and other liabilities              (34.7  )    (42.3  )
Net cash provided by operating activities                75.7         65.0
                                                                    
Investing activities:
Additions to finance receivables                         (144.4 )     (135.5 )
Collections of finance receivables                       122.5        106.1
Capital expenditures                                     (14.7  )     (21.8  )
Disposal of property and equipment                       0.3          1.9
Other                                                   (10.2  )    -      
Net cash used by investing activities                    (46.5  )     (49.3  )
                                                                    
Financing activities:
Proceeds from short-term borrowings                      -            6.5
Repayments of short-term borrowings                      (0.5   )     (7.7   )
Net increase (decrease) in other short-term              6.6          (1.0   )
borrowings
Cash dividends paid                                      (22.1  )     (20.1  )
Purchase of treasury stock                               (21.7  )     (29.9  )
Proceeds from stock purchase and option plans            7.4          13.3
Excess tax benefits from stock-based compensation        4.0          2.0
Other                                                   (3.0   )    (3.6   )
Net cash used by financing activities                    (29.3  )     (40.5  )
                                                                    
Effect of exchange rate changes on cash and cash        (0.8   )    0.8    
equivalents
Decrease in cash and cash equivalents                    (0.9   )     (24.0  )
                                                                    
Cash and cash equivalents at beginning of year          214.5      185.6  
Cash and cash equivalents at end of period             $ 213.6     $ 161.6  
                                                                   
Supplemental cash flow disclosures:
Cash paid for interest                                 $ (25.9  )   $ (26.2  )
Net cash paid for income taxes                           (21.6  )     (6.9   )
                                                                             
                                                                             
                                                                             

SNAP-ON INCORPORATED
Supplemental Consolidating Data - Condensed Statements of Earnings
(Amounts in millions)
(unaudited)
                                                                
                               Operations*               Financial Services
                               Three Months Ended        Three Months Ended
                               March 30,    March 31,    March 30,   March 31,
                               2013         2012         2013        2012
                                                                     
Net sales                      $ 741.7      $ 735.2      $ -         $ -
Cost of goods sold              (384.8 )    (387.5 )    -         -     
Gross profit                     356.9        347.7        -           -
Operating expenses              (249.1 )    (250.2 )    -         -     
Operating earnings before        107.8        97.5         -           -
financial services
                                                                     
Financial services revenue       -            -            44.0        38.0
Financial services expenses     -          -          (13.5 )    (14.1 )
Operating earnings from         -          -          30.5      23.9  
financial services
                                                                     
Operating earnings               107.8        97.5         30.5        23.9
Interest expense                 (13.2  )     (13.6  )     (0.4  )     (0.3  )
Intersegment interest income     11.3         9.8          (11.3 )     (9.8  )
(expense) – net
Other income (expense) – net    (0.7   )    (0.4   )    0.1       -     
Earnings before income taxes     105.2        93.3         18.9        13.8
and equity earnings (loss)
Income tax expense              (31.9  )    (30.1  )    (6.9  )    (5.1  )
Earnings before equity           73.3         63.2         12.0        8.7
earnings (loss)
Financial services – net
earnings attributable to         12.0         8.7          -           -
Snap-on Inc.
Equity earnings (loss), net     (0.2   )    1.1        -         -     
of tax
Net earnings                     85.1         73.0         12.0        8.7
Net earnings attributable to    (2.3   )    (2.0   )    -         -     
noncontrolling interests
Net earnings attributable to   $ 82.8      $ 71.0      $ 12.0     $ 8.7   
Snap-on Inc.
                                                                             

* Snap-on Inc. with Financial Services on the equity method.
  Transactions between Operations and Financial Services were eliminated to
  arrive at the consolidated financial statements.
  
  
  

SNAP-ON INCORPORATED
Supplemental Consolidating Data - Condensed Balance Sheets
(Amounts in millions)
(unaudited)
                                                             
                           Operations*                Financial Services
                           March 30,   December 29,   March 30,   December 29,
                           2013        2012           2013        2012
                                                                  
Assets
Cash and cash              $ 209.3     $   211.2      $ 4.3       $   3.3
equivalents
Intersegment receivables     12.7          14.1         -             -
Trade and other accounts     499.8         497.5        0.4           0.4
receivable – net
Finance receivables –        -             -            329.3         323.1
net
Contract receivables –       7.5           7.4          51.1          55.3
net
Inventories – net            401.3         404.2        -             -
Deferred income tax          61.1          68.8         12.0          13.0
assets
Prepaid expenses and        103.2        88.3        1.1          1.0
other assets
Total current assets         1,294.9       1,291.5      398.2         396.1
                                                                  
Property and equipment –     370.4         373.2        1.9           2.0
net
Investment in Financial      172.3         165.3        -             -
Services
Deferred income tax          107.0         110.2        0.2           0.2
assets
Long-term finance            -             -            502.6         494.6
receivables – net
Long-term contract           12.1          12.1         189.5         182.3
receivables – net
Goodwill                     800.3         807.4        -             -
Other intangibles – net      185.5         187.2        -             -
Other assets                59.2         65.3        1.0          1.1
Total assets               $ 3,001.7   $   3,012.2    $ 1,093.4   $   1,076.3
                                                                  
Liabilities and Equity
Notes payable and
current maturities of      $ 13.2      $   5.2        $ 98.2      $   -
long-term debt
Accounts payable             148.2         142.1        0.5           0.4
Intersegment payables        -             -            12.7          14.1
Accrued benefits             50.6          50.6         0.1           -
Accrued compensation         60.9          84.9         1.3           3.4
Franchisee deposits          51.5          54.7         -             -
Other accrued               224.9        207.8       27.2         46.9
liabilities
Total current                549.3         545.3        140.0         64.8
liabilities
                                                                  
Long-term debt and
intersegment long-term       105.0         143.2        763.0         827.2
debt
Deferred income tax          132.8         125.7        1.0           1.4
liabilities
Retiree health care          47.2          48.4         -             -
benefits
Pension liabilities          252.9         260.7        -             -
Other long-term             68.1         69.9        17.1         17.6
liabilities
Total liabilities           1,155.3      1,193.2     921.1        911.0
                                                                  
Total shareholders'
equity attributable to       1,829.5       1,802.1      172.3         165.3
Snap-on Inc.
Noncontrolling interests    16.9         16.9        -            -
Total equity                1,846.4      1,819.0     172.3        165.3
Total liabilities and      $ 3,001.7   $   3,012.2    $ 1,093.4   $   1,076.3
equity
                                                                      

* Snap-on Inc. with Financial Services on the equity method.
  Transactions between Operations and Financial Services were eliminated to
  arrive at the consolidated financial statements.

Contact:

Snap-on Incorporated
Investors:
Leslie Kratcoski, 262/656-6121
or
Media:
Richard Secor, 262/656-5561
 
Press spacebar to pause and continue. Press esc to stop.