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Snap-on Reports Record First Quarter Results
-- First quarter diluted earnings per share increased to $0.58 from $0.57 in 1999, excluding $0.02 per share in non-recurring charges in 1999 related to Project Simplify actions. First quarter net earnings increased to $33.8 million from $33.4 million in 1999, excluding 1999 non-recurring items. After giving affect to non-recurring charges, net earnings in the first quarter of 1999 were $32.2 million.
-- Net sales in the quarter increased 20% to $544.3 million from $452.6 million in 1999, reflecting solid gains in dealer sales and the contribution from Bahco Group AB (formerly Sandvik Saws and Tools) acquired on Sept. 30, 1999. Excluding Bahco and the effects of currency translations, organic growth was 5% in the quarter.
"We are pleased to begin the new year with solid sales and strong earnings from operations," said Robert A. Cornog, Snap-on chairman, president and chief executive officer. "With Project Simplify largely behind us, our focus is squarely on global business results. This is demonstrated in the significant increase in operating income before net finance income."
Operating profit increased 39.6% in the quarter. The results were driven primarily by increased net sales, higher productivity and the savings from Project Simplify actions. Operating expenses as a percent of sales declined to 36.2% in the quarter compared with 40.3% in the first quarter of 1999. "Project Simplify is delivering the expected results in savings and in improved performance," Cornog said.
Growth in Global Transportation, the worldwide dealer van channel, was driven primarily by continued strong dealer sales in North America, up 6% excluding emissions-testing equipment sales. On a worldwide basis, reported sales grew 3% in the first quarter of 2000 over the comparable period in 1999 after giving affect to emissions-testing equipment sales.
Global Operations, the company's non-dealer tool and equipment products business, had a 44% sales increase for the first quarter of 2000 compared with the first quarter of 1999. The addition of Bahco and incremental sales to new-car dealerships, under management facilitation agreements with car manufacturers, contributed to the increase. The increases were partially offset by negative currency effects on European equipment sales and lower Industrial sales to the depressed aerospace sector. Bahco contributed to results as expected. Organic sales grew 9%, excluding the impact of currency translations and the contribution of Bahco.
Finance income declined, as anticipated, due to difficult comparisons with 1999, which included gains from receivables sold in connection with the formation of the financial services joint venture.
"The actions of the past few years have positioned us for the future," Cornog said. "Our core business is sound, with service levels exceeding historic levels, and focused on growth. The Bahco Group is focused on growing its existing business and channels, as well as realizing revenue synergies. Finally, our e-business initiatives provide for opportunities to enhance existing businesses and continue to improve internal processes."
Snap-on Incorporated is a leading global developer, manufacturer and marketer of tool, diagnostic and equipment solutions for professional tool users. Product lines include hand and power tools, diagnostics and shop equipment, tool storage products, diagnostics software and other solutions for the transportation service, industrial and other commercial industries. Products are sold through its franchise dealer van, company direct sales and distributor channels. Founded in 1920, Snap-on is a $1.9 billion, S&P 500 company headquartered in Kenosha, Wisconsin.
Statements in this news release that are not historical facts, including statements (i) that include the words "believes," "expects," "anticipates," or "estimates" or words of similar importance with reference to the Corporation or management; (ii) specifically identified as forward-looking; or (iii) describing the Corporation's or management's future plans, objectives or goals, are forward-looking statements. The Corporation or its representatives may also make similar forward-looking statements from time to time orally or in writing. The Corporation cautions the reader that these statements are subject to risks, uncertainties or other factors that could cause (and in some cases have caused) actual results to differ materially from those described in any such statement. Those important factors include the timing and progress with which the Corporation can continue to achieve higher productivity and attain further cost reductions; the Corporation's ability to retain and attract dealers, to integrate Bahco successfully, to realize benefits in growth and efficiencies from e-business investments and to withstand external negative factors including changes in trade, monetary and fiscal policies, laws and regulations, or other activities of governments or their agencies; and the absence of significant changes in the current competitive environment, inflation, currency fluctuations or the material worsening of economic and political situations around the world. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The Corporation operates in a continually changing business environment and new factors emerge from time to time. The Corporation cannot predict such factors nor can it assess the impact, if any, of such factors on the Corporation or its results. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Corporation disclaims any responsibility to update any forward-looking statement provided in this news release. Consolidated Balance Sheets and Statements of Earnings for Third Quarter 1999
Media contact:
Richard Secor
414/656-5561