Kenosha, WI - Snap-on Incorporated announced operating results for the first quarter of 2014.
Sales of $787.5 million increased $45.8 million, or 6.2%, from 2013 levels; excluding $15.2 million of acquisition-related sales and $5.9 million of unfavorable foreign currency translation, organic sales increased 5.0%. Operating earnings before financial services of $121.7 million improved to 15.5% of sales as compared to $107.8 million, or 14.5% of sales, last year.
Financial services operating earnings of $34.4 million increased $3.9 million, or 12.8%, from 2013 levels. Consolidated operating earnings of $156.1 million improved to 18.6% of revenues (net sales plus financial services revenue) as compared to $138.3 million, or 17.6% of revenues, last year. Net earnings of $95.9 million, or $1.62 per diluted share, compares with net earnings of $82.8 million, or $1.40 per diluted share, a year ago.
“Our first quarter results, including a 6.2% sales increase and a 15.7% rise in diluted earnings per share, represent an encouraging start for 2014,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “We believe that these results provide continued evidence that Snap-on’s value proposition of making work easier for serious professionals in workplaces of consequence is an ongoing strength as we continue to move forward along our clear runways for coherent growth: enhancing the franchise network, expanding in the vehicle repair garage, extending to critical industries and building in emerging markets. At the same time, our year-over-year 100 basis point improvement in operating margin further confirms the abundant potential of Snap-on Value Creation, our suite of principles and processes we employ every day around safety, quality, customer connection, innovation and rapid continuous improvement. Finally, these results would not have been possible without significant contributions from our franchisees and associates worldwide; I thank them for their ongoing and extraordinary commitment and dedication.”
Commercial & Industrial Group segment sales of $290.6 million in the quarter increased $24.2 million, or 9.1%, from 2013 levels. Excluding $3.1 million of unfavorable foreign currency translation, organic sales increased $27.3 million, or 10.4%, primarily due to higher sales to customers in critical industries and in the segment’s European-based hand tools business.
Operating earnings of $39.1 million in the period, including $2.1 million (80 basis points) of lower restructuring costs, increased $8.5 million from 2013 levels, and the operating margin (operating earnings as a percentage of segment sales) of 13.5% improved 200 basis points from 11.5% a year ago.
Snap-on Tools Group segment sales of $343.6 million in the quarter rose $16.3 million, or 5.0%, from 2013 levels, reflecting sales increases in both the company’s U.S. and international franchise operations. Excluding $3.1 million of unfavorable foreign currency translation, organic sales increased 6.0%.
Operating earnings of $49.2 million in the period increased $2.0 million from 2013 levels and the operating margin of 14.3% compared with 14.4% a year ago.
Repair Systems & Information Group segment sales of $262.7 million in the quarter increased $16.6 million, or 6.7%, from 2013 levels. Excluding $15.2 million of sales from Challenger Lifts, Inc., which was acquired May 2013, and $0.7 million of favorable foreign currency translation, organic sales increased $0.7 million as higher sales of diagnostic and repair information products to independent repair shop owners and managers were largely offset by lower sales to OEM dealerships.
Operating earnings of $58.1 million in the period, including $1.4 million (60 basis points) of higher restructuring costs, increased $1.6 million from 2013 levels and the operating margin of 22.1% compared with 23.0% a year ago.
Financial Services operating earnings of $34.4 million on revenue of $50.2 million in the quarter compared with operating earnings of $30.5 million on revenue of $44.0 million a year ago.
Corporate expenses of $24.7 million in the quarter compared with $26.5 million last year.
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 continues to expect that its full year 2014 effective income tax rate will be comparable to its 2013 rate.