Tools, tool storage and automotive repair products maker Snap-on reported its 2020 second quarter financial results on Friday, which showed accelerated sales declines amid the COVID-19 pandemic that has hammered the overall industrial products market that was already dealing with weakened demand to begin the year.
The Kenosha, WI-based company reported Q2 total sales of $724 million, down 23.9 percent year-over-year (YoY), with organic sales down 22.9 percent. Comparatively, Q1 sales of $852 million were down 7.5 percent YoY (down 6.9 percent organic). The company's Q2 gross profit of $341 million and 47.1 percent of sales fell from $474 million and 49.8 percent of sales a year earlier, while Q2 operating profit of $149 million and 12.6 percent margin fell from $190 million and 20.0 percent margin of a year earlier.
Snap-on's total Q2 net profit was $106 million, down from $137 million in Q1 and $185 million from a year earlier.
"We believe the effects of the virus can be represented in three phases: shock, or the significant stress associated with the early days; accommodation, or the gradual improvement reflecting the development of tactics to proceed safely in the COVID-19 environment; and finally, psychological recovery, or the restoration of confidence in the future," Snap-on chairman and CEO Nick Pinchuk commented, adding that major April sales declines narrowed in May and June.
By Snap-on business segment in Q2:
- Commercial & Industrial sales of $261.9 million were down 21.8 percent YoY, with organic sales down 20.2 percent. That comes after Q1 organic sales declined 5.7 percent YoY. The company said the Q2 organic decrease includes mid-teen declines in sales to customers in critical industries and in the power tools operation. Operating profit of $23 million was less than half of the $49 million from a year earlier and down from $31.5 million in Q1.
- Snap-on Tools Group sales of $323 million were down 20.3 percent YoY, with organic sales down 19.7 percent. That comes after Q1 organic sales were down 7.8 percent YoY. The company said the Q2 organic decline includes a mid-teen decline in the United States and a nearly 40 percent decline in the segment’s international operations. Operating profit of $38 million was down from $71 million of a year earlier and $49 million in Q1.
- Repair Systems & Information Group sales of $245 million were down 30.0 percent YoY, with organic sales down 29.5 percent. That comes after Q1 organic sales were down 4.0 percent YoY. The company said the Q2 organic decline includes declines of over 30 percent in both sales of undercar equipment and to OEM dealerships, as well as a midteen decrease in sales of diagnostic and repair information products to independent repair shop owners and managers. Operating profit of $51 million was down from $89 million of a year earlier and $77 million in Q1.