Kenosha, WI - Snap-on Incorporated announced 2013 operating results for the fourth quarter and full year.
Sales of $797.5 million in the quarter increased $44.3 million, or 5.9%, from 2012 levels; excluding $15.2 million of sales from the May 2013 acquisition of Challenger Lifts, Inc. (“Challenger”) and $5.3 million of unfavorable foreign currency translation, organic sales increased 4.6%.
Operating earnings before financial services of $123.6 million, or 15.5% of sales, in the quarter compares with $111.4 million, or 14.8% of sales, last year.
Financial services operating earnings of $33.0 million in the quarter increased $3.7 million, or 12.6%, from 2012 levels.
Consolidated operating earnings of $156.6 million, or 18.5% of revenues (net sales plus financial services revenue), in the quarter increased from $140.7 million, or 17.7% of revenues, last year.
Net earnings of $94.5 million, or $1.60 per diluted share, for the quarter compares with net earnings of $84.6 million, or $1.43 per diluted share, a year ago.
Full year 2013 sales of $3.1 billion increased 4.0% from 2012 levels; excluding $39.3 million of sales from the Challenger acquisition and $21.6 million of unfavorable foreign currency translation, organic sales increased 3.5%. Full year 2013 net earnings of $350.3 million, or $5.93 per diluted share, compares with 2012 net earnings of $306.1 million, or $5.20 per diluted share.
“Our fourth quarter results, including a 5.9% sales increase and a 15.5% operating margin before financial services, demonstrate continued and balanced progress down our runways for both improvement and growth,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “Despite some meaningful external headwinds throughout 2013, our full year sales reached a new milestone, surpassing $3 billion, and our full year operating margin before financial services of 15.1% reflects a 120 basis point year-over-year improvement. In 2014, we believe we’ll make further advances through Snap-on Value Creation, our suite of principles and processes we employ every day around safety, quality, customer connection, innovation and rapid continuous improvement. At the same time, to reach more and more professionals performing critical tasks wherever and whenever the costs and penalties for failure can be high, we’re continuing to drive forward along our runways for coherent growth: enhancing the franchise network, expanding in the vehicle repair garage, extending to critical industries and building in emerging markets. Finally, our progress in 2013 would not have been possible without the tremendous contributions and efforts of our franchisees and associates worldwide; I thank them all for their significant commitment and extraordinary dedication.”
Segment Results
Commercial & Industrial Group segment sales of $283.2 million in the quarter increased $7.6 million, or 2.8%, from 2012 levels. Excluding $2.8 million of unfavorable foreign currency translation, organic sales in the quarter increased $10.4 million, or 3.8%, primarily due to higher sales in the segment’s European-based hand tools business along with increased sales of power tools, partially offset by continued lower sales to the military.
Operating earnings of $37.1 million in the period increased $5.2 million from 2012 levels, and the operating margin (operating earnings as a percentage of segment sales) of 13.1% improved from 11.6% a year ago.
Snap-on Tools Group segment sales of $351.1 million in the quarter rose $29.5 million, or 9.2%, from 2012 levels, reflecting sales gains across both the company’s U.S. and international franchise operations. Excluding $2.9 million of unfavorable foreign currency translation, organic sales increased 10.2%.
Operating earnings of $51.0 million in the period increased $5.4 million from 2012 levels and the operating margin of 14.5% improved from 14.2% a year ago.
Repair Systems & Information Group segment sales of $264.6 million in the quarter increased $23.0 million, or 9.5%, from 2012 levels. Excluding $15.2 million of sales from the Challenger acquisition and $0.7 million of favorable foreign currency translation, organic sales in the quarter rose $7.1 million, or 2.9%. The year-over-year organic sales increase primarily reflects higher sales of diagnostic and repair information products to independent repair shop owners and managers, as well as gains in sales of undercar equipment, partially offset by lower sales to OEM dealerships.
Operating earnings of $60.8 million in the period increased $5.4 million from 2012 levels and the operating margin of 23.0% compared with 22.9% a year ago.
Financial Services operating earnings of $33.0 million on revenue of $47.4 million in the quarter compared with operating earnings of $29.3 million on revenue of $42.9 million a year ago.
Corporate expenses of $25.3 million in the quarter reflect higher performance-based compensation and other expenses, as compared with corporate expenses of $21.5 million last year.
Outlook
In 2014, 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 anticipates that capital expenditures in 2014 will be in a range of $70 million to $80 million. Snap-on expects that its full year 2014 effective income tax rate will be comparable to its 2013 rate.
