Snap-on Announces Second Quarter 2016 Results
Diluted EPS of $2.36 increases 16.3%;
Operating earnings before financial services of 19.1% of sales up 140 basis points;
Reported net sales up 2.4%; Organic net sales up 2.9%
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 operating results for the
second quarter of 2016.
- Net sales of $872.3 million increased $20.5 million, or 2.4%, from 2015 levels; excluding $10.2
million (120 basis points) of unfavorable foreign currency translation and $5.9 million (70 basis points) of acquisition-related
sales, organic sales increased $24.8 million or 2.9%. (See “Non-GAAP Measures” below for a definition of, and further information
on, organic sales.)
- Operating earnings before financial services of $166.4 million increased 140 basis points to 19.1% of
sales as compared to $150.8 million, or 17.7% of sales, last year.
- Financial services operating earnings of $49.5 million increased $8.1 million, or 19.6%, from 2015
levels; financial services revenue of $69.3 million increased 18.1% from 2015 levels.
- Consolidated operating earnings of $215.9 million improved to 22.9% of revenues (net sales plus
financial services revenue) as compared to $192.2 million, or 21.1% of revenues, last year.
- The second quarter effective income tax rate was 31.0% in 2016 and 32.0% in 2015.
- Net earnings of $140.1 million, or $2.36 per diluted share, compared to net earnings of $120.0
million, or $2.03 per diluted share, a year ago.
“We believe our second quarter results continue to confirm Snap-on’s capabilities in serving serious professionals performing
critical tasks in workplaces of consequence around the world,” said Nick Pinchuk, Snap-on chairman and chief executive officer.
“This performance, which includes 2.9% organic sales growth and a 16.3% increase in diluted earnings per share, demonstrates
further progress along our defined runways for coherent growth and ongoing strength in automotive repair while overcoming
continuing headwinds in certain challenging end markets and geographies. The 140 basis point improvement in operating margin before
financial services also reflects contributions from our Snap-on Value Creation Processes, which drive our ongoing improvements in
safety, quality, customer connection, innovation and rapid continuous improvement. Finally, these results and achievements reflect
significant effort and dedication across the organization and I thank our franchisees and associates worldwide for their
extraordinary contributions and commitment.”
Segment Results
Commercial & Industrial Group segment sales of $285.7 million in the quarter decreased $10.1 million, or 3.4%, from
2015 levels. Excluding $4.2 million of unfavorable foreign currency translation, organic sales declined $5.9 million, or 2.0%, as
lower sales to customers in critical industries were partially offset by gains in the segment’s Asia/Pacific and power tools
operations, as well as higher sales from the segment’s European-based hand tools business.
Operating earnings of $39.3 million in the period, including $1.0 million of unfavorable foreign currency effects, decreased
$2.9 million from 2015 levels, and the operating margin (operating earnings as a percentage of segment sales) of 13.8% declined 50
basis points from 14.3% a year ago.
Snap-on Tools Group segment sales of $416.7 million in the quarter rose $18.0 million, or 4.5%, from 2015 levels.
Excluding $4.7 million of unfavorable foreign currency translation, organic sales were up 5.8%, reflecting similar sales increases
in both the company’s U.S. and international franchise operations.
Operating earnings of $76.3 million in the period, including $4.1 million of unfavorable foreign currency effects, increased
$8.3 million from 2015 levels, and the operating margin of 18.3% improved 120 basis points from 17.1% a year ago.
Repair Systems & Information Group segment sales of $295.2 million in the quarter rose $17.8 million, or 6.4%, from
2015 levels. Excluding $5.9 million of acquisition-related sales and $2.3 million of unfavorable foreign currency translation,
organic sales increased $14.2 million, or 5.2%, due to higher sales of diagnostic and repair information products to independent
repair shop owners and managers, increased sales of undercar equipment and higher sales to OEM dealerships.
Operating earnings of $74.5 million in the period, including $1.0 million of unfavorable foreign currency effects, increased
$6.8 million from 2015 levels, and the operating margin of 25.2% improved 80 basis points from 24.4% a year ago.
Financial Services operating earnings of $49.5 million on revenue of $69.3 million in the quarter compared to operating
earnings of $41.4 million on revenue of $58.7 million a year ago.
Corporate expenses of $23.7 million in the quarter declined $3.4 million from $27.1 million last year, primarily due to
lower stock-based (mark-to-market) compensation and pension expense.
Outlook
Snap-on expects to make continued progress in 2016 along its defined runways for coherent growth, leveraging capabilities
already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in
automotive repair, but also in adjacent markets, additional geographies and other areas, including in critical industries, where
the cost and penalties for failure can be high. In pursuit of these initiatives, Snap-on continues to expect that capital
expenditures in 2016 will be in a range of $80 million to $90 million. Snap-on also continues to anticipate that its full year 2016
effective income tax rate will be comparable to its 2015 full year rate.
Conference Call and Webcast on July 21, 2016, at 9:00 a.m. Central Time
A discussion of this release will be webcast on Thursday, July 21, 2016, 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 to the webcast. The slide presentation accompanying the call can
be accessed under the Downloads tab in the webcast viewer, as well as on the Snap-on website under the tabs Investor Information / Investor Events / Company Presentations.
Non-GAAP Measures
References in this document to “organic sales” refer to sales from continuing operations calculated in accordance with generally
accepted accounting principles in the United States (“GAAP”), excluding acquisition-related sales and the impact of foreign
currency translation. Snap-on has significant international operations and is subject to risks inherent with foreign operations,
including foreign currency translation fluctuations. Management evaluates the company’s sales performance based on organic sales
growth, which primarily reflects growth from the company’s existing businesses as a result of increased output, customer base and
geographic expansion, new product development and/or pricing, and excludes sales contributions from acquired operations the company
did not own as of the comparable prior-year reporting period. The company’s organic sales disclosures also exclude the effects of
foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends.
Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful
information to aid in identifying underlying growth trends in our businesses and facilitating comparisons of our sales performance
with prior periods.
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 and aerospace, agriculture,
construction, government and military, mining, natural resources, power generation and technical education. Snap-on also derives
income from various financing programs to facilitate the sales of its products. Products and services are sold through the
company’s franchisee, company-direct, distributor and internet channels. Founded in 1920, Snap-on is a $3.4 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 may contain 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 2, 2016, 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 www.snapon.com.
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| SNAP-ON INCORPORATED |
| Condensed Consolidated Statements of Earnings |
| (Amounts in millions, except per share data) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
July 2, |
|
July 4, |
|
|
July 2, |
|
July 4, |
|
|
2016 |
|
2015 |
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
$ |
872.3 |
|
|
$ |
851.8 |
|
|
|
$ |
1,706.5 |
|
|
$ |
1,679.6 |
|
| Cost of goods sold |
|
|
(441.0 |
) |
|
|
(432.8 |
) |
|
|
|
(859.9 |
) |
|
|
(850.5 |
) |
| Gross profit |
|
|
431.3 |
|
|
|
419.0 |
|
|
|
|
846.6 |
|
|
|
829.1 |
|
| Operating expenses |
|
|
(264.9 |
) |
|
|
(268.2 |
) |
|
|
|
(524.8 |
) |
|
|
(540.4 |
) |
| Operating earnings before financial services |
|
|
166.4 |
|
|
|
150.8 |
|
|
|
|
321.8 |
|
|
|
288.7 |
|
|
|
|
|
|
|
|
|
|
|
| Financial services revenue |
|
|
69.3 |
|
|
|
58.7 |
|
|
|
|
135.6 |
|
|
|
116.1 |
|
| Financial services expenses |
|
|
(19.8 |
) |
|
|
(17.3 |
) |
|
|
|
(39.1 |
) |
|
|
(34.4 |
) |
| Operating earnings from financial services |
|
|
49.5 |
|
|
|
41.4 |
|
|
|
|
96.5 |
|
|
|
81.7 |
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings |
|
|
215.9 |
|
|
|
192.2 |
|
|
|
|
418.3 |
|
|
|
370.4 |
|
| Interest expense |
|
|
(12.9 |
) |
|
|
(12.9 |
) |
|
|
|
(26.0 |
) |
|
|
(25.9 |
) |
| Other income (expense) – net |
|
|
1.2 |
|
|
|
(0.7 |
) |
|
|
|
0.5 |
|
|
|
(1.4 |
) |
| Earnings before income taxes and equity earnings |
|
|
204.2 |
|
|
|
178.6 |
|
|
|
|
392.8 |
|
|
|
343.1 |
|
| Income tax expense |
|
|
(62.2 |
) |
|
|
(56.2 |
) |
|
|
|
(119.8 |
) |
|
|
(108.0 |
) |
| Earnings before equity earnings |
|
|
142.0 |
|
|
|
122.4 |
|
|
|
|
273.0 |
|
|
|
235.1 |
|
| Equity earnings, net of tax |
|
|
1.4 |
|
|
|
0.6 |
|
|
|
|
1.7 |
|
|
|
1.1 |
|
| Net earnings |
|
|
143.4 |
|
|
|
123.0 |
|
|
|
|
274.7 |
|
|
|
236.2 |
|
| Net earnings attributable to noncontrolling interests |
|
|
(3.3 |
) |
|
|
(3.0 |
) |
|
|
|
(6.3 |
) |
|
|
(5.7 |
) |
| Net earnings attributable to Snap-on Inc. |
|
$ |
140.1 |
|
|
$ |
120.0 |
|
|
|
$ |
268.4 |
|
|
$ |
230.5 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
| Net earnings per share attributable to Snap-on Inc.: |
|
|
|
|
|
|
|
|
|
| Basic |
|
$ |
2.41 |
|
|
$ |
2.07 |
|
|
|
$ |
4.62 |
|
|
$ |
3.97 |
|
| Diluted |
|
|
2.36 |
|
|
|
2.03 |
|
|
|
|
4.52 |
|
|
|
3.90 |
|
|
|
|
|
|
|
|
|
|
|
| Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
| Basic |
|
|
58.1 |
|
|
|
58.1 |
|
|
|
|
58.1 |
|
|
|
58.1 |
|
| Effect of dilutive securities |
|
|
1.3 |
|
|
|
1.0 |
|
|
|
|
1.3 |
|
|
|
1.0 |
|
| Diluted |
|
|
59.4 |
|
|
|
59.1 |
|
|
|
|
59.4 |
|
|
|
59.1 |
|
|
|
|
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Supplemental Segment Information |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
July 2, |
|
July 4, |
|
|
July 2, |
|
July 4, |
|
|
2016 |
|
2015 |
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
| Net sales: |
|
|
|
|
|
|
|
|
|
| Commercial & Industrial Group |
|
$ |
285.7 |
|
|
$ |
295.8 |
|
|
|
$ |
572.7 |
|
|
$ |
593.3 |
|
| Snap-on Tools Group |
|
|
416.7 |
|
|
|
398.7 |
|
|
|
|
819.2 |
|
|
|
776.9 |
|
| Repair Systems & Information Group |
|
|
295.2 |
|
|
|
277.4 |
|
|
|
|
574.0 |
|
|
|
549.7 |
|
| Segment net sales |
|
|
997.6 |
|
|
|
971.9 |
|
|
|
|
1,965.9 |
|
|
|
1,919.9 |
|
| Intersegment eliminations |
|
|
(125.3 |
) |
|
|
(120.1 |
) |
|
|
|
(259.4 |
) |
|
|
(240.3 |
) |
| Total net sales |
|
$ |
872.3 |
|
|
$ |
851.8 |
|
|
|
$ |
1,706.5 |
|
|
$ |
1,679.6 |
|
| Financial Services revenue |
|
|
69.3 |
|
|
|
58.7 |
|
|
|
|
135.6 |
|
|
|
116.1 |
|
| Total revenues |
|
$ |
941.6 |
|
|
$ |
910.5 |
|
|
|
$ |
1,842.1 |
|
|
$ |
1,795.7 |
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings: |
|
|
|
|
|
|
|
|
|
| Commercial & Industrial Group |
|
$ |
39.3 |
|
|
$ |
42.2 |
|
|
|
$ |
80.4 |
|
|
$ |
86.2 |
|
| Snap-on Tools Group |
|
|
76.3 |
|
|
|
68.0 |
|
|
|
|
143.0 |
|
|
|
127.8 |
|
| Repair Systems & Information Group |
|
|
74.5 |
|
|
|
67.7 |
|
|
|
|
143.5 |
|
|
|
131.6 |
|
| Financial Services |
|
|
49.5 |
|
|
|
41.4 |
|
|
|
|
96.5 |
|
|
|
81.7 |
|
| Segment operating earnings |
|
|
239.6 |
|
|
|
219.3 |
|
|
|
|
463.4 |
|
|
|
427.3 |
|
| Corporate |
|
|
(23.7 |
) |
|
|
(27.1 |
) |
|
|
|
(45.1 |
) |
|
|
(56.9 |
) |
| Operating earnings |
|
$ |
215.9 |
|
|
$ |
192.2 |
|
|
|
$ |
418.3 |
|
|
$ |
370.4 |
|
| Interest expense |
|
|
(12.9 |
) |
|
|
(12.9 |
) |
|
|
|
(26.0 |
) |
|
|
(25.9 |
) |
| Other income (expense) – net |
|
|
1.2 |
|
|
|
(0.7 |
) |
|
|
|
0.5 |
|
|
|
(1.4 |
) |
|
Earnings before income taxes and equity earnings
|
|
$ |
204.2 |
|
|
$ |
178.6 |
|
|
|
$ |
392.8 |
|
|
$ |
343.1 |
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Condensed Consolidated Balance Sheets |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 2, |
|
|
January 2, |
|
|
2016 |
|
|
2016 |
|
|
|
|
|
|
| Assets |
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
119.9 |
|
|
|
$ |
92.8 |
|
| Trade and other accounts receivable – net |
|
|
565.9 |
|
|
|
|
562.5 |
|
| Finance receivables – net |
|
|
463.5 |
|
|
|
|
447.3 |
|
| Contract receivables – net |
|
|
76.4 |
|
|
|
|
82.1 |
|
| Inventories – net |
|
|
507.1 |
|
|
|
|
497.8 |
|
| Prepaid expenses and other assets |
|
|
119.6 |
|
|
|
|
106.3 |
|
| Total current assets |
|
|
1,852.4 |
|
|
|
|
1,788.8 |
|
|
|
|
|
|
|
| Property and equipment – net |
|
|
418.5 |
|
|
|
|
413.5 |
|
| Deferred income tax assets |
|
|
61.6 |
|
|
|
|
60.4 |
|
| Long-term finance receivables – net |
|
|
868.2 |
|
|
|
|
772.7 |
|
| Long-term contract receivables – net |
|
|
276.6 |
|
|
|
|
266.6 |
|
| Goodwill |
|
|
788.2 |
|
|
|
|
790.1 |
|
| Other intangibles – net |
|
|
189.2 |
|
|
|
|
195.0 |
|
| Other assets |
|
|
50.4 |
|
|
|
|
44.0 |
|
| Total assets |
|
$ |
4,505.1 |
|
|
|
$ |
4,331.1 |
|
|
|
|
|
|
|
| Liabilities and Equity |
|
|
|
|
|
| Notes payable and current maturities of long-term debt |
|
$ |
174.4 |
|
|
|
$ |
18.4 |
|
| Accounts payable |
|
|
169.1 |
|
|
|
|
148.3 |
|
| Accrued benefits |
|
|
44.9 |
|
|
|
|
52.1 |
|
| Accrued compensation |
|
|
73.9 |
|
|
|
|
91.0 |
|
| Franchisee deposits |
|
|
68.9 |
|
|
|
|
64.4 |
|
| Other accrued liabilities |
|
|
321.9 |
|
|
|
|
296.0 |
|
| Total current liabilities |
|
|
853.1 |
|
|
|
|
670.2 |
|
|
|
|
|
|
|
| Long-term debt |
|
|
715.2 |
|
|
|
|
861.7 |
|
| Deferred income tax liabilities |
|
|
13.5 |
|
|
|
|
14.3 |
|
| Retiree health care benefits |
|
|
36.1 |
|
|
|
|
37.9 |
|
| Pension liabilities |
|
|
193.2 |
|
|
|
|
227.8 |
|
| Other long-term liabilities |
|
|
92.4 |
|
|
|
|
88.5 |
|
| Total liabilities |
|
|
1,903.5 |
|
|
|
|
1,900.4 |
|
|
|
|
|
|
|
| Equity |
|
|
|
|
|
| Shareholders' equity attributable to Snap-on Inc. |
|
|
|
|
|
| Common stock |
|
|
67.4 |
|
|
|
|
67.4 |
|
| Additional paid-in capital |
|
|
311.1 |
|
|
|
|
296.3 |
|
| Retained earnings |
|
|
3,183.9 |
|
|
|
|
2,986.9 |
|
| Accumulated other comprehensive loss |
|
|
(369.8 |
) |
|
|
|
(364.2 |
) |
| Treasury stock at cost |
|
|
(609.0 |
) |
|
|
|
(573.7 |
) |
| Total shareholders' equity attributable to Snap-on Inc. |
|
|
2,583.6 |
|
|
|
|
2,412.7 |
|
| Noncontrolling interests |
|
|
18.0 |
|
|
|
|
18.0 |
|
| Total equity |
|
|
2,601.6 |
|
|
|
|
2,430.7 |
|
| Total liabilities and equity |
|
$ |
4,505.1 |
|
|
|
$ |
4,331.1 |
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
|
|
|
|
|
| Condensed Consolidated Statements of Cash Flows |
|
|
|
|
|
| (Amounts in millions) |
|
|
|
|
|
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
July 2, |
|
|
July 4, |
|
|
2016 |
|
|
2015 |
| Operating activities: |
|
|
|
|
|
| Net earnings |
|
$ |
143.4 |
|
|
|
$ |
123.0 |
|
|
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
|
|
|
|
|
|
| Depreciation |
|
|
15.5 |
|
|
|
|
14.4 |
|
| Amortization of other intangibles |
|
|
6.2 |
|
|
|
|
6.2 |
|
| Provision for losses on finance receivables |
|
|
10.3 |
|
|
|
|
7.3 |
|
| Provision for losses on non-finance receivables |
|
|
1.5 |
|
|
|
|
3.0 |
|
| Stock-based compensation expense |
|
|
8.4 |
|
|
|
|
11.6 |
|
| Excess tax benefits from stock-based compensation |
|
|
- |
|
|
|
|
(3.0 |
) |
| Deferred income tax benefit |
|
|
(15.1 |
) |
|
|
|
(7.6 |
) |
| Loss on sale of assets |
|
|
- |
|
|
|
|
0.3 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
| Increase in trade and other accounts receivable |
|
|
(1.0 |
) |
|
|
|
(6.6 |
) |
| Increase in contract receivables |
|
|
(5.8 |
) |
|
|
|
(6.4 |
) |
| Increase in inventories |
|
|
(2.1 |
) |
|
|
|
(11.8 |
) |
| Increase in prepaid and other assets |
|
|
(9.3 |
) |
|
|
|
(11.4 |
) |
| Increase in accounts payable |
|
|
9.1 |
|
|
|
|
2.9 |
|
| Increase in accruals and other liabilities |
|
|
1.0 |
|
|
|
|
38.4 |
|
| Net cash provided by operating activities |
|
|
162.1 |
|
|
|
|
160.3 |
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
| Additions to finance receivables |
|
|
(244.2 |
) |
|
|
|
(217.2 |
) |
| Collections of finance receivables |
|
|
167.3 |
|
|
|
|
159.1 |
|
| Capital expenditures |
|
|
(20.6 |
) |
|
|
|
(27.7 |
) |
| Disposal of property and equipment |
|
|
1.2 |
|
|
|
|
0.4 |
|
| Other |
|
|
1.0 |
|
|
|
|
- |
|
| Net cash used by investing activities |
|
|
(95.3 |
) |
|
|
|
(85.4 |
) |
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
| Proceeds from notes payable |
|
|
- |
|
|
|
|
1.6 |
|
| Repayments of notes payable |
|
|
- |
|
|
|
|
(1.6 |
) |
| Net increase (decrease) in other short-term borrowings |
|
|
3.8 |
|
|
|
|
(17.6 |
) |
| Cash dividends paid |
|
|
(35.5 |
) |
|
|
|
(30.8 |
) |
| Purchases of treasury stock |
|
|
(35.4 |
) |
|
|
|
(37.2 |
) |
| Proceeds from stock purchase and option plans |
|
|
18.5 |
|
|
|
|
22.0 |
|
| Excess tax benefits from stock-based compensation |
|
|
- |
|
|
|
|
3.0 |
|
| Other |
|
|
(4.0 |
) |
|
|
|
(4.3 |
) |
| Net cash used by financing activities |
|
|
(52.6 |
) |
|
|
|
(64.9 |
) |
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
|
(0.6 |
) |
|
|
|
0.2 |
|
| Increase in cash and cash equivalents |
|
|
13.6 |
|
|
|
|
10.2 |
|
|
|
|
|
|
|
| Cash and cash equivalents at beginning of period |
|
|
106.3 |
|
|
|
|
114.4 |
|
| Cash and cash equivalents at end of period |
|
$ |
119.9 |
|
|
|
$ |
124.6 |
|
|
|
|
|
|
|
| Supplemental cash flow disclosures: |
|
|
|
|
|
| Cash paid for interest |
|
$ |
(1.6 |
) |
|
|
$ |
(1.7 |
) |
| Net cash paid for income taxes |
|
|
(88.8 |
) |
|
|
|
(45.7 |
) |
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Condensed Consolidated Statements of Cash Flows |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
July 2, |
|
|
July 4, |
|
|
2016 |
|
|
2015 |
| Operating activities: |
|
|
|
|
|
| Net earnings |
|
$ |
274.7 |
|
|
|
$ |
236.2 |
|
|
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
|
|
|
|
|
|
| Depreciation |
|
|
30.4 |
|
|
|
|
28.2 |
|
| Amortization of other intangibles |
|
|
12.3 |
|
|
|
|
12.4 |
|
| Provision for losses on finance receivables |
|
|
19.6 |
|
|
|
|
14.4 |
|
| Provision for losses on non-finance receivables |
|
|
4.7 |
|
|
|
|
7.9 |
|
| Stock-based compensation expense |
|
|
14.2 |
|
|
|
|
23.1 |
|
| Excess tax benefits from stock-based compensation |
|
|
- |
|
|
|
|
(14.0 |
) |
| Deferred income tax provision (benefit) |
|
|
(5.7 |
) |
|
|
|
3.1 |
|
| Loss on sale of assets |
|
|
- |
|
|
|
|
0.3 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
| Increase in trade and other accounts receivable |
|
|
(5.8 |
) |
|
|
|
(26.8 |
) |
| Increase in contract receivables |
|
|
(5.5 |
) |
|
|
|
(9.7 |
) |
| Increase in inventories |
|
|
(12.0 |
) |
|
|
|
(35.8 |
) |
| Increase in prepaid and other assets |
|
|
(24.8 |
) |
|
|
|
(38.4 |
) |
| Increase in accounts payable |
|
|
24.1 |
|
|
|
|
27.8 |
|
| Increase (decrease) in accruals and other liabilities |
|
|
(22.5 |
) |
|
|
|
9.7 |
|
| Net cash provided by operating activities |
|
|
303.7 |
|
|
|
|
238.4 |
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
| Additions to finance receivables |
|
|
(475.1 |
) |
|
|
|
(416.0 |
) |
| Collections of finance receivables |
|
|
341.4 |
|
|
|
|
319.3 |
|
| Capital expenditures |
|
|
(40.1 |
) |
|
|
|
(45.8 |
) |
| Disposal of property and equipment |
|
|
1.4 |
|
|
|
|
0.4 |
|
| Other |
|
|
(2.5 |
) |
|
|
|
(2.8 |
) |
| Net cash used by investing activities |
|
|
(174.9 |
) |
|
|
|
(144.9 |
) |
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
| Proceeds from notes payable |
|
|
- |
|
|
|
|
1.6 |
|
| Repayments of notes payable |
|
|
(0.8 |
) |
|
|
|
(1.6 |
) |
| Net increase in other short-term borrowings |
|
|
7.4 |
|
|
|
|
5.2 |
|
| Cash dividends paid |
|
|
(70.9 |
) |
|
|
|
(61.7 |
) |
| Purchases of treasury stock |
|
|
(58.5 |
) |
|
|
|
(86.9 |
) |
| Proceeds from stock purchase and option plans |
|
|
28.4 |
|
|
|
|
36.5 |
|
| Excess tax benefits from stock-based compensation |
|
|
- |
|
|
|
|
14.0 |
|
| Other |
|
|
(7.5 |
) |
|
|
|
(7.3 |
) |
| Net cash used by financing activities |
|
|
(101.9 |
) |
|
|
|
(100.2 |
) |
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
|
0.2 |
|
|
|
|
(1.6 |
) |
| Increase (decrease) in cash and cash equivalents |
|
|
27.1 |
|
|
|
|
(8.3 |
) |
|
|
|
|
|
|
| Cash and cash equivalents at beginning of year |
|
|
92.8 |
|
|
|
|
132.9 |
|
| Cash and cash equivalents at end of period |
|
$ |
119.9 |
|
|
|
$ |
124.6 |
|
|
|
|
|
|
|
| Supplemental cash flow disclosures: |
|
|
|
|
|
| Cash paid for interest |
|
$ |
(25.5 |
) |
|
|
$ |
(25.4 |
) |
| Net cash paid for income taxes |
|
|
(106.5 |
) |
|
|
|
(66.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Supplemental Data
|
| The following non-GAAP supplemental data is presented for informational
purposes to provide readers with insight into the information used by management for assessing the operating performance of
Snap-on Incorporated's ("Snap-on's") non-financial services ("Operations") and "Financial Services" businesses. |
| |
|
The supplemental Operations data reflects the results of operations and financial position of
Snap-on's tools, diagnostic and equipment products, software and other non-financial services operations with Financial
Services on the equity method. The supplemental Financial Services data reflects the results of operations and financial
position of Snap-on's U.S. and international financial services operations. The financing needs of Financial Services are met
through intersegment borrowings and cash generated from Operations; Financial Services is charged interest expense on
intersegment borrowings at market rates. Income taxes are charged to Financial Services on the basis of the specific tax
attributes generated by the U.S. and international financial services businesses. Transactions between the Operations and
Financial Services businesses were eliminated to arrive at the Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Supplemental Consolidating Data - Condensed Statements of
Earnings |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations* |
|
|
Financial Services |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
July 2, |
|
July 4, |
|
|
July 2, |
|
July 4, |
|
|
2016 |
|
2015 |
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
$ |
872.3 |
|
|
$ |
851.8 |
|
|
|
$ |
- |
|
|
$ |
- |
|
| Cost of goods sold |
|
|
(441.0 |
) |
|
|
(432.8 |
) |
|
|
|
- |
|
|
|
- |
|
| Gross profit |
|
|
431.3 |
|
|
|
419.0 |
|
|
|
|
- |
|
|
|
- |
|
| Operating expenses |
|
|
(264.9 |
) |
|
|
(268.2 |
) |
|
|
|
- |
|
|
|
- |
|
| Operating earnings before financial services |
|
|
166.4 |
|
|
|
150.8 |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
| Financial services revenue |
|
|
- |
|
|
|
- |
|
|
|
|
69.3 |
|
|
|
58.7 |
|
| Financial services expenses |
|
|
- |
|
|
|
- |
|
|
|
|
(19.8 |
) |
|
|
(17.3 |
) |
| Operating earnings from financial services |
|
|
- |
|
|
|
- |
|
|
|
|
49.5 |
|
|
|
41.4 |
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings |
|
|
166.4 |
|
|
|
150.8 |
|
|
|
|
49.5 |
|
|
|
41.4 |
|
| Interest expense |
|
|
(12.8 |
) |
|
|
(12.8 |
) |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
| Intersegment interest income (expense) – net |
|
|
18.3 |
|
|
|
15.7 |
|
|
|
|
(18.3 |
) |
|
|
(15.7 |
) |
| Other income (expense) – net |
|
|
1.2 |
|
|
|
(0.7 |
) |
|
|
|
- |
|
|
|
- |
|
| Earnings before income taxes and equity earnings |
|
|
173.1 |
|
|
|
153.0 |
|
|
|
|
31.1 |
|
|
|
25.6 |
|
| Income tax expense |
|
|
(50.7 |
) |
|
|
(46.8 |
) |
|
|
|
(11.5 |
) |
|
|
(9.4 |
) |
| Earnings before equity earnings |
|
|
122.4 |
|
|
|
106.2 |
|
|
|
|
19.6 |
|
|
|
16.2 |
|
|
Financial services – net earnings attributable to Snap-on Inc.
|
|
|
19.6 |
|
|
|
16.2 |
|
|
|
|
- |
|
|
|
- |
|
| Equity earnings, net of tax |
|
|
1.4 |
|
|
|
0.6 |
|
|
|
|
- |
|
|
|
- |
|
| Net earnings |
|
|
143.4 |
|
|
|
123.0 |
|
|
|
|
19.6 |
|
|
|
16.2 |
|
| Net earnings attributable to noncontrolling interests |
|
|
(3.3 |
) |
|
|
(3.0 |
) |
|
|
|
- |
|
|
|
- |
|
| Net earnings attributable to Snap-on Inc. |
|
$ |
140.1 |
|
|
$ |
120.0 |
|
|
|
$ |
19.6 |
|
|
$ |
16.2 |
|
|
|
|
|
|
|
|
|
|
|
| * Snap-on Inc. with Financial Services on the equity method. |
|
|
|
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Supplemental Consolidating Data - Condensed Statements of
Earnings |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations* |
|
|
Financial Services |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
July 2, |
|
July 4, |
|
|
July 2, |
|
July 4, |
|
|
2016 |
|
2015 |
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
$ |
1,706.5 |
|
|
$ |
1,679.6 |
|
|
|
$ |
- |
|
|
$ |
- |
|
| Cost of goods sold |
|
|
(859.9 |
) |
|
|
(850.5 |
) |
|
|
|
- |
|
|
|
- |
|
| Gross profit |
|
|
846.6 |
|
|
|
829.1 |
|
|
|
|
- |
|
|
|
- |
|
| Operating expenses |
|
|
(524.8 |
) |
|
|
(540.4 |
) |
|
|
|
- |
|
|
|
- |
|
| Operating earnings before financial services |
|
|
321.8 |
|
|
|
288.7 |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
| Financial services revenue |
|
|
- |
|
|
|
- |
|
|
|
|
135.6 |
|
|
|
116.1 |
|
| Financial services expenses |
|
|
- |
|
|
|
- |
|
|
|
|
(39.1 |
) |
|
|
(34.4 |
) |
| Operating earnings from financial services |
|
|
- |
|
|
|
- |
|
|
|
|
96.5 |
|
|
|
81.7 |
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings |
|
|
321.8 |
|
|
|
288.7 |
|
|
|
|
96.5 |
|
|
|
81.7 |
|
| Interest expense |
|
|
(25.8 |
) |
|
|
(25.7 |
) |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
| Intersegment interest income (expense) – net |
|
|
35.6 |
|
|
|
30.7 |
|
|
|
|
(35.6 |
) |
|
|
(30.7 |
) |
| Other income (expense) – net |
|
|
0.5 |
|
|
|
(1.4 |
) |
|
|
|
- |
|
|
|
- |
|
| Earnings before income taxes and equity earnings |
|
|
332.1 |
|
|
|
292.3 |
|
|
|
|
60.7 |
|
|
|
50.8 |
|
| Income tax expense |
|
|
(97.4 |
) |
|
|
(89.3 |
) |
|
|
|
(22.4 |
) |
|
|
(18.7 |
) |
| Earnings before equity earnings |
|
|
234.7 |
|
|
|
203.0 |
|
|
|
|
38.3 |
|
|
|
32.1 |
|
|
Financial services – net earnings attributable to Snap-on Inc.
|
|
|
38.3 |
|
|
|
32.1 |
|
|
|
|
- |
|
|
|
- |
|
| Equity earnings, net of tax |
|
|
1.7 |
|
|
|
1.1 |
|
|
|
|
- |
|
|
|
- |
|
| Net earnings |
|
|
274.7 |
|
|
|
236.2 |
|
|
|
|
38.3 |
|
|
|
32.1 |
|
| Net earnings attributable to noncontrolling interests |
|
|
(6.3 |
) |
|
|
(5.7 |
) |
|
|
|
- |
|
|
|
- |
|
| Net earnings attributable to Snap-on Inc. |
|
$ |
268.4 |
|
|
$ |
230.5 |
|
|
|
$ |
38.3 |
|
|
$ |
32.1 |
|
|
|
|
|
|
|
|
|
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| * Snap-on Inc. with Financial Services on the equity method. |
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| SNAP-ON INCORPORATED |
| Supplemental Consolidating Data - Condensed Balance Sheets |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations* |
|
Financial Services |
|
|
July 2, |
|
January 2, |
|
July 2, |
|
January 2, |
|
|
2016 |
|
2016 |
|
2016 |
|
2016 |
|
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
119.7 |
|
$ |
92.7 |
|
$ |
0.2 |
|
$ |
0.1 |
| Intersegment receivables |
|
|
18.8 |
|
|
15.9 |
|
|
- |
|
|
- |
| Trade and other accounts receivable – net |
|
|
565.6 |
|
|
562.2 |
|
|
0.3 |
|
|
0.3 |
| Finance receivables – net |
|
|
- |
|
|
- |
|
|
463.5 |
|
|
447.3 |
| Contract receivables – net |
|
|
7.9 |
|
|
8.0 |
|
|
68.5 |
|
|
74.1 |
| Inventories – net |
|
|
507.1 |
|
|
497.8 |
|
|
- |
|
|
- |
| Prepaid expenses and other assets |
|
|
125.0 |
|
|
111.5 |
|
|
1.5 |
|
|
1.2 |
| Total current assets |
|
|
1,344.1 |
|
|
1,288.1 |
|
|
534.0 |
|
|
523.0 |
|
|
|
|
|
|
|
|
|
| Property and equipment – net |
|
|
417.2 |
|
|
412.1 |
|
|
1.3 |
|
|
1.4 |
| Investment in Financial Services |
|
|
270.9 |
|
|
251.8 |
|
|
- |
|
|
- |
| Deferred income tax assets |
|
|
40.0 |
|
|
40.6 |
|
|
21.6 |
|
|
19.8 |
| Intersegment long-term notes receivable |
|
|
489.4 |
|
|
398.7 |
|
|
- |
|
|
- |
| Long-term finance receivables – net |
|
|
- |
|
|
- |
|
|
868.2 |
|
|
772.7 |
| Long-term contract receivables – net |
|
|
11.3 |
|
|
12.1 |
|
|
265.3 |
|
|
254.5 |
| Goodwill |
|
|
788.2 |
|
|
790.1 |
|
|
- |
|
|
- |
| Other intangibles – net |
|
|
189.2 |
|
|
195.0 |
|
|
- |
|
|
- |
| Other assets |
|
|
58.1 |
|
|
49.9 |
|
|
0.1 |
|
|
1.0 |
| Total assets |
|
$ |
3,608.4 |
|
$ |
3,438.4 |
|
$ |
1,690.5 |
|
$ |
1,572.4 |
|
|
|
|
|
|
|
|
|
| Liabilities and Equity |
|
|
|
|
|
|
|
|
| Notes payable and current maturities of long-term debt |
|
$ |
24.4 |
|
$ |
18.4 |
|
$ |
150.0 |
|
$ |
- |
| Accounts payable |
|
|
169.0 |
|
|
148.2 |
|
|
0.1 |
|
|
0.1 |
| Intersegment payables |
|
|
- |
|
|
- |
|
|
18.8 |
|
|
15.9 |
| Accrued benefits |
|
|
44.9 |
|
|
52.1 |
|
|
- |
|
|
- |
| Accrued compensation |
|
|
71.5 |
|
|
86.9 |
|
|
2.4 |
|
|
4.1 |
| Franchisee deposits |
|
|
68.9 |
|
|
64.4 |
|
|
- |
|
|
- |
| Other accrued liabilities |
|
|
300.3 |
|
|
277.4 |
|
|
28.5 |
|
|
25.0 |
| Total current liabilities |
|
|
679.0 |
|
|
647.4 |
|
|
199.8 |
|
|
45.1 |
|
|
|
|
|
|
|
|
|
| Long-term debt and intersegment long-term debt |
|
|
- |
|
|
- |
|
|
1,204.6 |
|
|
1,260.4 |
| Deferred income tax liabilities |
|
|
13.5 |
|
|
14.1 |
|
|
- |
|
|
0.2 |
| Retiree health care benefits |
|
|
36.1 |
|
|
37.9 |
|
|
- |
|
|
- |
| Pension liabilities |
|
|
193.2 |
|
|
227.8 |
|
|
- |
|
|
- |
| Other long-term liabilities |
|
|
85.0 |
|
|
80.5 |
|
|
15.2 |
|
|
14.9 |
| Total liabilities |
|
|
1,006.8 |
|
|
1,007.7 |
|
|
1,419.6 |
|
|
1,320.6 |
|
|
|
|
|
|
|
|
|
| Total shareholders' equity attributable to Snap-on Inc. |
|
|
2,583.6 |
|
|
2,412.7 |
|
|
270.9 |
|
|
251.8 |
| Noncontrolling interests |
|
|
18.0 |
|
|
18.0 |
|
|
- |
|
|
- |
| Total equity |
|
|
2,601.6 |
|
|
2,430.7 |
|
|
270.9 |
|
|
251.8 |
| Total liabilities and equity |
|
$ |
3,608.4 |
|
$ |
3,438.4 |
|
$ |
1,690.5 |
|
$ |
1,572.4 |
|
|
|
|
|
|
|
|
|
| * Snap-on Inc. with Financial Services on the equity method. |
Snap-on Incorporated
Investors:
Leslie Kratcoski
262/656-6121
or
Media:
Richard Secor
262/656-5561
View source version on businesswire.com: http://www.businesswire.com/news/home/20160721005250/en/