Snap-On Incorporated ( SNA ) reported revenues of $737.9 million for the second quarter of 2012, up 1.5% year over year. Excluding $20.8 million of unfavorable foreign currency translation, organic revenues increased 4.5%. Overall sales (net sales + financial services revenue) were $777.8 million.
Net earnings of $76.4 million or $1.30 per diluted share increased from $66.9 million, or $1.14 per diluted share a year ago. This was 8.3% above the Zacks Consensus Estimate of $1.20.
Gross profit was $349.9 million and margin grew 320 basis points (bps) to 47.4% of revenues, compared to 47.1% a year ago.
Operating expenses of $245.3 million in the quarter were greater than $243.4 million largely due to higher volume related expenses.
Commercial and Industrial Group reported revenues of $283.4 million for the second quarter, which improved 1.3% from 2011 levels. The segment's organic revenue grew 5.1% excluding foreign currency translation of $10.1 million.
Revenues in Snap-on Tools Group increased 8.7% year-over-year to $325.0 million, largely due to continued higher sales in the United States. On an organic basis (excluding $3.5 million unfavorable currency impact), sales were up 10.0%.
Repair Systems & Information Group sales of $227.4 million declined 3.0% year-over-year. Excluding currency translation, organic sales increased 0.2%, reflecting higher sales to repair shop owners and managers.
Financial Services operating earnings were $25.6 million in the second quarter on revenue of $39.9 million compared to operating earnings of $17.5 million on revenue of $30.3 million in the prior-year period. The increase was driven by continued growth of the on-book finance portfolio.
Balance Sheet and Cash Flow
Exiting the year, cash and cash equivalents declined to $173.6 million compared to $185.6 million in December 2011. Net cash provided by operating activities was a positive $91.7 million compared to a negative $13.7 million in year-ago period.
The company had long term debt of $191.7 million with a debt to capitalization ratio of 10.4%.
Snap-on expects to continue with its planned strategic investments to improve its mobile tool distribution network, expand in the vehicle repair garage, extend to critical industries and build in emerging markets. Therefore, as a result of these investment initiatives, Snap-on now anticipates that capital expenditures in 2012 will be in the range of $70 million to $80 million, of which $39.8 million was already spent in the first half of 2012.
Snap-On currently holds a Zacks #4Rank, which implies a short-term 'Sell' rating on the stock.