Snap-on Announces Fourth Quarter and Full Year 2011 Results

Fourth quarter diluted EPS of $1.27 up 28.3% year over year;
Operating earnings of $125.9 million in the quarter up 29.9% from 2010 levels;
Fourth-quarter sales of $736.6 million up 5.7% year over year

KENOSHA, Wis.--(BUSINESS WIRE)--Feb. 2, 2012-- Snap-on Incorporated (NYSE: SNA), a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks, today announced 2011 operating results for the fourth quarter and full year.

• Sales of $736.6 million in the quarter increased $39.7 million, or 5.7%, from 2010 levels; excluding $1.5 million of unfavorable foreign currency translation, organic sales increased 5.9%.
• Operating earnings before financial services of $103.8 million in the quarter increased 18.6% from 2010 levels and, as a percentage of sales, improved 150 basis points to 14.1% from 12.6% last year.
• Consolidated operating earnings of $125.9 million in the quarter increased 29.9% from 2010 levels, including $12.7 million of higher earnings from financial services. As a percentage of revenues (net sales plus financial services revenue), operating earnings improved 280 basis points to 16.3% from 13.5% last year.
• The effective income tax rate for the 2011 fourth quarter was 33.0%; the fourth quarter 2010 effective income tax rate was 30.1%.
• Net earnings of $74.3 million, or $1.27 per diluted share, for the fourth quarter of 2011 increased $16.4 million, or $0.28 per diluted share, from $57.9 million, or $0.99 per diluted share, a year ago.
• Full year 2011 sales of $2.85 billion increased 9.0% from prior year levels. Full year 2011 net earnings were $276.3 million, or $4.71 per diluted share. Excluding a previously disclosed $18.0 million pretax ($11.1 million after tax or $0.19 per diluted share) arbitration settlement gain, full year 2011 net earnings were $265.2 million, or $4.52 per diluted share, as compared to $186.5 million, or $3.19 per diluted share, last year.

“Our fourth quarter results extend our ongoing trend of year-over-year increases in sales and earnings,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “We believe they once again offer clear testimony to the continued advancements we’re making along our defined runways for coherent growth, which are those strategic areas of importance we have identified as being decisive to our future: enhancing the franchise network, expanding in the vehicle repair garage, extending into critical industries, and building in emerging markets. We further believe our fourth quarter and full year 2011 performance underscores our commitment to the Snap-on Value Creation Processes, which has enabled us to further navigate our runways for improvement in the crucial areas of safety, quality, customer connection, innovation and rapid continuous improvement (RCI) and has fueled our ongoing trend of increasing profitability. Finally, our encouraging results for both the fourth quarter and full year of 2011 reflect significant effort and achievement across our entire company; I thank all our franchisees and associates worldwide for their dedication to Snap-on and for their ongoing contributions and commitment to our team.”

Segment Results

Commercial & Industrial Group segment sales of $295.4 million in the fourth quarter increased $13.9 million, or 4.9%, from 2010 levels, including $0.2 million from favorable foreign currency translation.

Operating earnings of $33.0 million in the period compared with $35.4 million last year. As a percentage of sales, operating earnings of 11.2% in the quarter compared with 12.6% a year ago. Restructuring costs in the quarter were $2.7 million higher than prior-year levels.

Snap-on Tools Group segment sales of $292.8 million in the fourth quarter rose $24.6 million, or 9.2%, from 2010 levels; excluding $0.3 million of unfavorable foreign currency translation, organic sales for the Group increased 9.3%.

Operating earnings of $39.6 million in the period were up $13.8 million from 2010 levels. As a percentage of sales, operating earnings of 13.5% in the quarter increased from 9.6% a year ago. Restructuring costs in the quarter were $4.3 million lower than prior-year levels.

Repair Systems & Information Group segment sales of $236.5 million in the fourth quarter increased $4.7 million, or 2.0%, from 2010 levels; excluding $0.9 million of unfavorable foreign currency translation, organic sales rose 2.4%.

Operating earnings of $49.2 million in the period increased $3.5 million from 2010 levels. As a percentage of sales, operating earnings of 20.8% in the quarter compared with 19.7% a year ago.

Financial Services operating earnings were $22.1 million on $35.5 million of revenue in the fourth quarter of 2011, as compared to operating earnings of $9.4 million on $21.5 million of revenue a year ago. The higher revenues and operating earnings in the fourth quarter of 2011 primarily reflects the continued growth of the on-book finance portfolio.

Corporate expenses of $18.0 million in the fourth quarter of 2011 compared to $19.4 million last year.

Outlook

In 2012, Snap-on believes that it will continue to further capitalize on its defined runways for coherent growth, which include enhancing its mobile tool distribution network, expanding in the vehicle repair garage, extending to critical industries and building in emerging markets. In pursuit of these strategic initiatives, Snap-on anticipates that capital expenditures in 2012 will be in a range of $60 million to $70 million. Restructuring expenses in 2012 will include an estimated $6 million to $8 million charge in the second quarter of 2012 associated with the settlement of a pension plan related to the 2011 closure of the Newmarket, Canada, facility; pension expense in 2012, exclusive of this charge, is expected to be comparable with 2011 levels. Snap-on anticipates that its full year 2012 effective income tax rate will approximate 33.5%.

Conference Call and Webcast February 2, 2012, at 9:00 a.m. Central Time

A discussion of this release will be webcast on Thursday, February 2, 2012, at 9:00 a.m. Central Time, and a replay will be available for at least 10 days following the call. To access the webcast, visit http://www.snapon.com/sna and click on the link toward the bottom of the page. Additional detail about Snap-on is also available on the Snap-on web site.

About Snap-on

Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, including aviation, aerospace, agriculture, construction, government and military, mining, natural resources and power generation. Products and services are sold through the company’s franchisee, company-direct, distributor and internet channels. Founded in 1920, Snap-on is a $2.9 billion, S&P 500 company headquartered in Kenosha, Wisconsin.

Forward-looking Statements

Statements in this news release that are not historical facts, including statements that (i) are in the future tense; (ii) include the words “expects,” “anticipates,” “intends,” “approximates,” or similar words that reference Snap-on or its management; (iii) are specifically identified as forward-looking; or (iv) describe Snap-on’s or management’s future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Snap-on cautions the reader that this news release contains statements, including earnings projections, that are forward-looking in nature and were developed by management in good faith and, accordingly, are subject to risks and uncertainties regarding Snap-on’s expected results that could cause (and in some cases have caused) actual results to differ materially from those described or contemplated in any forward-looking statement. Factors that may cause the company’s actual results to differ materially from those contained in the forward-looking statements include those found in the company’s reports filed with the Securities and Exchange Commission, including the information under the “Safe Harbor” and “Risk Factors” headings in its Annual Report on Form 10-K for the fiscal year ended January 1, 2011, which are incorporated herein by reference. Snap-on disclaims any responsibility to update any forward-looking statement provided in this news release, except as required by law.

For additional information, please visit http://www.snapon.com.

Snap-on is providing the above reconciliations of non-GAAP financial measures (excluding the $18.0 million pretax arbitration settlement gain recorded in the second quarter of 2011) as management believes that these non-GAAP measures provide a more meaningful year-over-year comparison of the company's 2011 operating performance.

Source: Snap-on Incorporated

Snap-on Incorporated
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