Snap-on Sales Decelerate In Q1, But Still Solid

Sales jumped 11 percent in Snap-on's Commercial & Industrial Group, but were mostly flat in its Tools group as organic revenue fell there.

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Kenosha, WI-based tool maker Snap-on reported its 2018 first quarter financial figures last week, showing a continued year-over-year (YoY) sales increase, though at a slower rate than in previous quarters.

The company posted total Q1 sales of $935.5 million, up 5.5 percent YoY, with organic sales up 0.8 percent. That compares with Q4 2017's 9.5 percent sales increase and 4.3 percent organic sales increase.

Total Q1 profit of $163.0 million was up from $141.6 million a year earlier and up from $129.5 million in Q4 2017. Q1 operating profit of $177.7 million was up from $170.2 million a year earlier. Gross margin of 50.4 percent declined 10 basis points.

"We are encouraged with our first quarter 2018 results, which were achieved despite continuing headwinds in the Snap-on Tools Group,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “Net sales growth in both the Commercial and Industrial Group and the Repair Systems and Information Group provides ongoing validation of the fundamental strength of Snap-on’s value proposition of making work easier for serious professionals and demonstrates continued progress along our defined runways for coherent growth."

By business segment in Q1:

  • Snap-on Tools Group sales of $404.7 million increased 1.1 percent YoY, with organic sales down 2.7 percent. The organic decline includes lower sales in Snap-on's U.S. franchise operations, partially offset by gains in international operations. Operating profit of $68.9 million decreased by $1.4 million YoY.
  • Repair Systems & Information Group sales of $337.0 million increased 5.7 percent YoY, with organic sales up 2.6 percent. The organic gain includes higher sales of diagnostic and repair information products to independent repair shop owners and managers and increased sales to OEM dealerships. Operating profit of $85.8 million increased $6.7 million YoY.
  • Commercial & Industrial Group sales of $441.6 million increased 11.0 percent YoY, with organic sales up 1.9 percent. The organic gain primarily includes higher sales to customers in critical industries and gains in the segment's European-based hand tools business and Asia/Pacific operations, partially offset by lower sales of power tools. Operating profit of $46.5 million increased $4.6 million YoY.
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