Snap-on Q3 Earnings Beat Estimates - Analyst Blog

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Industrial goods manufacturer Snap-on Inc. ( SNA ) reported stellar third quarter 2013 results with a healthy growth in net sales and earnings. Net income for the reported quarter increased to $84.6 million or $1.43 per share from $74.1 million or $1.26 per share in the year-earlier quarter. The reported earnings also exceeded the Zacks Consensus Estimate by 3 cents.

Despite continued macroeconomic headwinds, management's focus on enhancing van network, building on repair shop owners and managers, extending service to critical industries, strategic acquisitions and expanding in emerging markets continued to favorably benefit the company.

Total Revenue

Net sales of the company were up 5.8% year over year to $753.2 million. Total revenue in the reported quarter increased to $798.3 million from $752.1 million in the year-ago quarter. Excluding inorganic revenue of $15.6 million from the May 2013 acquisition of Challenger Lifts, Inc. and adverse foreign currency translation effects, organic sales increased 4.7% year over year.

The company reported revenue growth in three of its four operating segments. Higher revenues in the Snap-On Tools, Repairs Systems & Information Group and Financial services were partially offset by lower revenues in the Commercial & Industrial Group. Total revenue was also above the Zacks Consensus Estimate of $745 million.

Segment Results

Commercial & Industrial Group segment sales declined 1.9% year over year to $275.2 million due to lower sales to the military and soft European hand tools business, which in turn was a result of ongoing economic weakness in the region. Organic sales also declined 0.9% year over year.  

Snap-on Tools Group segment sales increased 8.1% year over year to $333.8 million, driven by sales gains in both U.S. and international franchise operations. Organic sales were up 9.5%.

Repair Systems & Information segment sales increased 13.8% to $252.7 million, 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. Organic sales were up 6.7% year over year.

Financial Service s reported revenues of $45.1 million compared with $40.5 million in the year-ago quarter. Operating earnings for the segment were $31.6 million compared with $27.9 million in the prior-year period.

Snap-on registered consolidated operating earnings of $142.9 million or 17.9% of total revenue during the reported quarter compared with $124.1 million or 16.5% of total revenue in the year-earlier quarter.    

Balance Sheet & Cash Flow

Cash and cash equivalents at quarter-end were $182.5 million with long-term debt of $861.1 million. Net cash provided by operating activities comprehensively increased to $84.3 million during the quarter from $69.7 million in the prior-year period.

Outlook

Concurrent with the earnings release, Snap-On reiterated its outlook for 2013. Snap-On expects to incur capital expenditures of $75 million in 2013. The company noted that it will continue to focus on emerging markets, expand its presence in new industries, enhance its mobile tool distribution network and expand in the vehicle repair garage market.

Snap-on currently has a Zacks Rank #3 (Hold). Other companies in the industry worth considering at the moment include Empresas ICA, S.A.B. de C.V. ( ICA ), Great Lakes Dredge & Dock Corporation ( GLDD ) and Core Laboratories NV ( CLB ), each carrying a Zacks Rank #2 (Buy).



CORE LABS NV (CLB): Free Stock Analysis Report

GREAT LAKES DRG (GLDD): Free Stock Analysis Report

EMPRESAS ICA (ICA): Free Stock Analysis Report

SNAP-ON INC (SNA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CLB , GLDD , ICA , SNA

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