Snap-on Announces Second Quarter 2017 Results
Diluted EPS of $2.60 increases 10.2%;
Operating earnings before financial services of 19.9% of sales up 80 basis points;
Reported net sales up 5.6%; Organic net sales up 2.7%
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 2017.
- Net sales of $921.4 million increased $49.1 million, or 5.6%, from 2016 levels, reflecting a $23.2
million, or 2.7%, organic sales gain and $38.4 million of acquisition-related sales, partially offset by $12.5 million of
unfavorable foreign currency translation. (See “Non-GAAP Measures” below for a definition of, and further explanation about,
organic sales.)
- Operating earnings before financial services of $183.7 million improved 80 basis points to 19.9% of
sales as compared to $166.4 million, or 19.1% of sales, last year.
- Financial services revenue of $77.7 million increased $8.4 million from 2016 levels; financial
services operating earnings of $54.6 million increased from $49.5 million last year.
- Consolidated operating earnings of $238.3 million improved 100 basis points to 23.9% of revenues (net
sales plus financial services revenue) as compared to $215.9 million, or 22.9% of revenues, last year.
- The second quarter effective income tax rate was 30.6% in 2017 and 31.0% in 2016.
- Net earnings of $153.2 million, or $2.60 per diluted share, compared to net earnings of $140.1
million, or $2.36 per diluted share, a year ago.
“We believe diluted earnings per share growth of 10.2% and a net sales increase of 5.6%, including an organic sales rise of
2.7%, represent encouraging results for the second quarter and confirm our success in serving serious professionals performing
critical tasks,” said Nick Pinchuk, Snap-on chairman and chief executive officer. “Our year-over-year improvement in operating
margin before financial services reflects ongoing progress through our Snap-on Value Creation Processes. At the same time, these
results also demonstrate continued advancement along our strategic runways for growth, as indicated by the notable increase in
activity in the quarter. Despite some sales headwinds in the quarter for the Snap-on Tools Group, we believe the vehicle repair
markets in which we operate remain robust and afford significant ongoing opportunity. Furthermore, our acquisition of Norbar Torque
Tools in the second quarter adds to our expanding product offering to customers in critical industries. Finally, these results
would not have been possible without the dedication and capability of our franchisees and associates worldwide; I thank them for
their extraordinary commitment and ongoing contributions.”
Segment Results
Commercial & Industrial Group segment sales of $310.0 million in the quarter increased $24.3 million, or 8.5%, from
2016 levels, reflecting a $13.3 million, or 4.7%, organic sales gain, $15.9 million of acquisition-related sales, and $4.9 million
of unfavorable foreign currency translation. The organic sales increase primarily includes gains in the segment’s European-based
hand tools business and higher sales to customers in critical industries.
Operating earnings of $42.7 million in the period increased $3.4 million from 2016 levels, and the operating margin (operating
earnings as a percentage of segment sales) was 13.8% in both periods.
Snap-on Tools Group segment sales of $413.8 million in the quarter decreased $2.9 million, or 0.7%, from 2016 levels,
reflecting a $2.1 million, or 0.5%, organic sales gain and $5.0 million of unfavorable foreign currency translation.
Operating earnings of $80.6 million in the period, including $3.2 million of unfavorable foreign currency effects, increased
$4.3 million from 2016 levels, and the operating margin of 19.5% improved 120 basis points from 18.3% a year ago.
Repair Systems & Information Group segment sales of $338.1 million in the quarter increased $42.9 million, or 14.5%,
from 2016 levels, reflecting a $24.1 million, or 8.3%, organic sales gain, $22.5 million of acquisition-related sales and $3.7
million of unfavorable foreign currency translation. The organic sales gain includes higher sales of diagnostics and repair
information products to independent repair shop owners and managers, increased sales to OEM dealerships, and higher sales of
undercar equipment.
Operating earnings of $81.9 million in the period, including $1.2 million of unfavorable foreign currency effects, increased
$7.4 million from 2016 levels, and the operating margin of 24.2% compared to 25.2% a year ago.
Financial Services operating earnings of $54.6 million on revenue of $77.7 million in the quarter compared to operating
earnings of $49.5 million on revenue of $69.3 million a year ago. Originations of $270.6 million in the second quarter decreased
$10.4 million, or 3.7%, from 2016 levels.
Corporate expenses of $21.5 million in the quarter compared to $23.7 million last year, primarily due to lower pension
expense.
Outlook
Snap-on expects to make continued progress in 2017 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 in adjacent markets, additional geographies and other areas, including extending in critical industries,
where the cost and penalties for failure can be high. In pursuit of these initiatives, Snap-on expects that capital expenditures in
2017 will be in a range of $80 million to $90 million, of which $34.4 million was expended in the first six months of the year.
Snap-on also anticipates that its full year 2017 effective income tax rate will be comparable to its 2016 full year rate.
Conference Call and Webcast on July 20, 2017, at 9:00 a.m. Central Time
A discussion of this release will be webcast on Thursday, July 20, 2017, 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”), adjusted to exclude acquisition-related sales and the impact of
foreign currency translation. 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 and support its franchise business. 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 December 31, 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.
| |
| SNAP-ON INCORPORATED |
| Condensed Consolidated Statements of Earnings |
| (Amounts in millions, except per share data) |
| (unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
July 1, |
|
July 2, |
|
|
July 1, |
|
July 2, |
|
|
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
|
$ |
921.4 |
|
|
$ |
872.3 |
|
|
|
$ |
1,808.5 |
|
|
$ |
1,706.5 |
|
| Cost of goods sold |
|
|
|
(458.4 |
) |
|
|
(441.0 |
) |
|
|
|
(897.5 |
) |
|
|
(859.9 |
) |
| Gross profit |
|
|
|
463.0 |
|
|
|
431.3 |
|
|
|
|
911.0 |
|
|
|
846.6 |
|
| Operating expenses |
|
|
|
(279.3 |
) |
|
|
(264.9 |
) |
|
|
|
(557.8 |
) |
|
|
(524.8 |
) |
| Operating earnings before financial services |
|
|
|
183.7 |
|
|
|
166.4 |
|
|
|
|
353.2 |
|
|
|
321.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial services revenue |
|
|
|
77.7 |
|
|
|
69.3 |
|
|
|
|
154.5 |
|
|
|
135.6 |
|
| Financial services expenses |
|
|
|
(23.1 |
) |
|
|
(19.8 |
) |
|
|
|
(47.4 |
) |
|
|
(39.1 |
) |
| Operating earnings from financial services |
|
|
|
54.6 |
|
|
|
49.5 |
|
|
|
|
107.1 |
|
|
|
96.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings |
|
|
|
238.3 |
|
|
|
215.9 |
|
|
|
|
460.3 |
|
|
|
418.3 |
|
| Interest expense |
|
|
|
(13.0 |
) |
|
|
(12.9 |
) |
|
|
|
(25.7 |
) |
|
|
(26.0 |
) |
| Other income (expense) – net |
|
|
|
(1.9 |
) |
|
|
1.2 |
|
|
|
|
(3.6 |
) |
|
|
0.5 |
|
| Earnings before income taxes and equity earnings |
|
|
|
223.4 |
|
|
|
204.2 |
|
|
|
|
431.0 |
|
|
|
392.8 |
|
| Income tax expense |
|
|
|
(67.3 |
) |
|
|
(62.2 |
) |
|
|
|
(129.9 |
) |
|
|
(119.8 |
) |
| Earnings before equity earnings |
|
|
|
156.1 |
|
|
|
142.0 |
|
|
|
|
301.1 |
|
|
|
273.0 |
|
| Equity earnings, net of tax |
|
|
|
0.7 |
|
|
|
1.4 |
|
|
|
|
0.8 |
|
|
|
1.7 |
|
| Net earnings |
|
|
|
156.8 |
|
|
|
143.4 |
|
|
|
|
301.9 |
|
|
|
274.7 |
|
| Net earnings attributable to noncontrolling interests |
|
|
|
(3.6 |
) |
|
|
(3.3 |
) |
|
|
|
(7.1 |
) |
|
|
(6.3 |
) |
| Net earnings attributable to Snap-on Inc. |
|
|
$ |
153.2 |
|
|
$ |
140.1 |
|
|
|
$ |
294.8 |
|
|
$ |
268.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net earnings per share attributable to Snap-on Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
2.65 |
|
|
$ |
2.41 |
|
|
|
$ |
5.09 |
|
|
$ |
4.62 |
|
|
|
Diluted |
|
|
|
2.60 |
|
|
|
2.36 |
|
|
|
|
4.98 |
|
|
|
4.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
57.8 |
|
|
|
58.1 |
|
|
|
|
57.9 |
|
|
|
58.1 |
|
|
|
Effect of dilutive securities |
|
|
|
1.2 |
|
|
|
1.3 |
|
|
|
|
1.3 |
|
|
|
1.3 |
|
|
|
Diluted |
|
|
|
59.0 |
|
|
|
59.4 |
|
|
|
|
59.2 |
|
|
|
59.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Supplemental Segment Information |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
July 1, |
|
July 2, |
|
|
July 1, |
|
July 2, |
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
| Net sales: |
|
|
|
|
|
|
|
|
|
|
| Commercial & Industrial Group |
|
|
$ |
310.0 |
|
|
$ |
285.7 |
|
|
|
$ |
608.7 |
|
|
$ |
572.7 |
|
| Snap-on Tools Group |
|
|
|
413.8 |
|
|
|
416.7 |
|
|
|
|
823.2 |
|
|
|
819.2 |
|
| Repair Systems & Information Group |
|
|
|
338.1 |
|
|
|
295.2 |
|
|
|
|
656.9 |
|
|
|
574.0 |
|
| Segment net sales |
|
|
|
1,061.9 |
|
|
|
997.6 |
|
|
|
|
2,088.8 |
|
|
|
1,965.9 |
|
| Intersegment eliminations |
|
|
|
(140.5 |
) |
|
|
(125.3 |
) |
|
|
|
(280.3 |
) |
|
|
(259.4 |
) |
| Total net sales |
|
|
$ |
921.4 |
|
|
$ |
872.3 |
|
|
|
$ |
1,808.5 |
|
|
$ |
1,706.5 |
|
| Financial Services revenue |
|
|
|
77.7 |
|
|
|
69.3 |
|
|
|
|
154.5 |
|
|
|
135.6 |
|
| Total revenues |
|
|
$ |
999.1 |
|
|
$ |
941.6 |
|
|
|
$ |
1,963.0 |
|
|
$ |
1,842.1 |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings: |
|
|
|
|
|
|
|
|
|
|
| Commercial & Industrial Group |
|
|
$ |
42.7 |
|
|
$ |
39.3 |
|
|
|
$ |
84.3 |
|
|
$ |
80.4 |
|
| Snap-on Tools Group |
|
|
|
80.6 |
|
|
|
76.3 |
|
|
|
|
150.9 |
|
|
|
143.0 |
|
| Repair Systems & Information Group |
|
|
|
81.9 |
|
|
|
74.5 |
|
|
|
|
160.6 |
|
|
|
143.5 |
|
| Financial Services |
|
|
|
54.6 |
|
|
|
49.5 |
|
|
|
|
107.1 |
|
|
|
96.5 |
|
| Segment operating earnings |
|
|
|
259.8 |
|
|
|
239.6 |
|
|
|
|
502.9 |
|
|
|
463.4 |
|
| Corporate |
|
|
|
(21.5 |
) |
|
|
(23.7 |
) |
|
|
|
(42.6 |
) |
|
|
(45.1 |
) |
| Operating earnings |
|
|
$ |
238.3 |
|
|
$ |
215.9 |
|
|
|
$ |
460.3 |
|
|
$ |
418.3 |
|
| Interest expense |
|
|
|
(13.0 |
) |
|
|
(12.9 |
) |
|
|
|
(25.7 |
) |
|
|
(26.0 |
) |
| Other income (expense) – net |
|
|
|
(1.9 |
) |
|
|
1.2 |
|
|
|
|
(3.6 |
) |
|
|
0.5 |
|
| Earnings before income taxes |
|
|
|
|
|
|
|
|
|
|
| and equity earnings |
|
|
$ |
223.4 |
|
|
$ |
204.2 |
|
|
|
$ |
431.0 |
|
|
$ |
392.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Condensed Consolidated Balance Sheets |
| (Amounts in millions) |
| (unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 1, |
|
|
|
December 31, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
89.0 |
|
|
|
|
$ |
77.6 |
|
|
Trade and other accounts receivable – net |
|
|
|
645.3 |
|
|
|
|
|
598.8 |
|
|
Finance receivables – net |
|
|
|
496.5 |
|
|
|
|
|
472.5 |
|
|
Contract receivables – net |
|
|
|
82.4 |
|
|
|
|
|
88.1 |
|
|
Inventories – net |
|
|
|
601.4 |
|
|
|
|
|
530.5 |
|
|
Prepaid expenses and other assets |
|
|
|
119.5 |
|
|
|
|
|
116.5 |
|
|
|
Total current assets |
|
|
|
2,034.1 |
|
|
|
|
|
1,884.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment – net |
|
|
|
463.4 |
|
|
|
|
|
425.2 |
|
|
Deferred income tax assets |
|
|
|
71.8 |
|
|
|
|
|
72.8 |
|
|
Long-term finance receivables – net |
|
|
|
998.6 |
|
|
|
|
|
934.5 |
|
|
Long-term contract receivables – net |
|
|
|
299.4 |
|
|
|
|
|
286.7 |
|
|
Goodwill |
|
|
|
899.2 |
|
|
|
|
|
895.5 |
|
|
Other intangibles – net |
|
|
|
256.3 |
|
|
|
|
|
184.6 |
|
|
Other assets |
|
|
|
44.3 |
|
|
|
|
|
39.9 |
|
| Total assets |
|
|
$ |
5,067.1 |
|
|
|
|
$ |
4,723.2 |
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and Equity |
|
|
|
|
|
|
|
|
Notes payable and current maturities of long-term debt |
|
|
$ |
350.2 |
|
|
|
|
$ |
301.4 |
|
|
Accounts payable |
|
|
|
202.3 |
|
|
|
|
|
170.9 |
|
|
Accrued benefits |
|
|
|
43.7 |
|
|
|
|
|
52.8 |
|
|
Accrued compensation |
|
|
|
69.5 |
|
|
|
|
|
89.8 |
|
|
Franchisee deposits |
|
|
|
65.7 |
|
|
|
|
|
66.7 |
|
|
Other accrued liabilities |
|
|
|
342.4 |
|
|
|
|
|
307.9 |
|
|
|
Total current liabilities |
|
|
|
1,073.8 |
|
|
|
|
|
989.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
755.6 |
|
|
|
|
|
708.8 |
|
|
Deferred income tax liabilities |
|
|
|
21.9 |
|
|
|
|
|
13.1 |
|
|
Retiree health care benefits |
|
|
|
35.1 |
|
|
|
|
|
36.7 |
|
|
Pension liabilities |
|
|
|
213.9 |
|
|
|
|
|
246.5 |
|
|
Other long-term liabilities |
|
|
|
93.8 |
|
|
|
|
|
93.4 |
|
|
|
Total liabilities |
|
|
|
2,194.1 |
|
|
|
|
|
2,088.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
Shareholders' equity attributable to Snap-on Inc. |
|
|
|
|
|
|
|
|
|
Common stock |
|
|
|
67.4 |
|
|
|
|
|
67.4 |
|
|
|
Additional paid-in capital |
|
|
|
337.1 |
|
|
|
|
|
317.3 |
|
|
|
Retained earnings |
|
|
|
3,597.0 |
|
|
|
|
|
3,384.9 |
|
|
|
Accumulated other comprehensive loss |
|
|
|
(397.0 |
) |
|
|
|
|
(498.5 |
) |
|
|
Treasury stock at cost |
|
|
|
(749.6 |
) |
|
|
|
|
(653.9 |
) |
|
|
|
Total shareholders' equity attributable to Snap-on Inc. |
|
|
|
2,854.9 |
|
|
|
|
|
2,617.2 |
|
|
|
Noncontrolling interests |
|
|
|
18.1 |
|
|
|
|
|
18.0 |
|
|
|
|
Total equity |
|
|
|
2,873.0 |
|
|
|
|
|
2,635.2 |
|
| Total liabilities and equity |
|
|
$ |
5,067.1 |
|
|
|
|
$ |
4,723.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Condensed Consolidated Statements of Cash Flows |
| (Amounts in millions) |
|
(unaudited)
|
| |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
July 1, |
|
|
July 2, |
|
|
|
|
2017 |
|
|
2016 |
| Operating activities: |
|
|
|
|
|
|
| Net earnings |
|
|
$ |
156.8 |
|
|
|
$ |
143.4 |
|
| Adjustments to reconcile net earnings to net cash provided (used) by |
|
|
|
|
|
|
|
operating activities: |
|
|
|
|
|
|
|
Depreciation |
|
|
|
16.3 |
|
|
|
|
15.5 |
|
|
Amortization of other intangibles |
|
|
|
6.5 |
|
|
|
|
6.2 |
|
|
Provision for losses on finance receivables |
|
|
|
12.8 |
|
|
|
|
10.3 |
|
|
Provision for losses on non-finance receivables |
|
|
|
2.4 |
|
|
|
|
1.5 |
|
|
Stock-based compensation expense |
|
|
|
7.0 |
|
|
|
|
8.4 |
|
|
Deferred income tax provision |
|
|
|
(4.3 |
) |
|
|
|
(15.1 |
) |
| Changes in operating assets and liabilities, net of effects of
acquisitions: |
|
|
|
|
|
|
|
Increase in trade and other accounts receivable |
|
|
|
(24.9 |
) |
|
|
|
(1.0 |
) |
|
Increase in contract receivables |
|
|
|
(3.5 |
) |
|
|
|
(5.8 |
) |
|
Increase in inventories |
|
|
|
(31.0 |
) |
|
|
|
(2.1 |
) |
|
Increase in prepaid and other assets |
|
|
|
(2.4 |
) |
|
|
|
(9.3 |
) |
|
Increase in accounts payable |
|
|
|
7.4 |
|
|
|
|
9.1 |
|
|
Increase (decrease) in accruals and other liabilities |
|
|
|
(16.0 |
) |
|
|
|
1.0 |
|
| Net cash provided by operating activities |
|
|
|
127.1 |
|
|
|
|
162.1 |
|
|
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
|
|
Additions to finance receivables |
|
|
|
(231.8 |
) |
|
|
|
(244.2 |
) |
|
Collections of finance receivables |
|
|
|
179.1 |
|
|
|
|
167.3 |
|
|
Capital expenditures |
|
|
|
(15.8 |
) |
|
|
|
(20.6 |
) |
|
Acquisitions of businesses, net of cash acquired |
|
|
|
(70.7 |
) |
|
|
|
- |
|
|
Disposals of property and equipment |
|
|
|
(0.1 |
) |
|
|
|
1.2 |
|
|
Other |
|
|
|
0.7 |
|
|
|
|
1.0 |
|
| Net cash used by investing activities |
|
|
|
(138.6 |
) |
|
|
|
(95.3 |
) |
|
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
|
|
Net increase in other short-term borrowings |
|
|
|
83.0 |
|
|
|
|
3.8 |
|
|
Cash dividends paid |
|
|
|
(41.1 |
) |
|
|
|
(35.5 |
) |
|
Purchases of treasury stock |
|
|
|
(86.7 |
) |
|
|
|
(35.4 |
) |
|
Proceeds from stock purchase and option plans |
|
|
|
20.5 |
|
|
|
|
18.5 |
|
|
Other |
|
|
|
0.9 |
|
|
|
|
(4.0 |
) |
| Net cash used by financing activities |
|
|
|
(23.4 |
) |
|
|
|
(52.6 |
) |
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash
equivalents |
|
|
|
0.9 |
|
|
|
|
(0.6 |
) |
| Increase (decrease) in cash and cash equivalents |
|
|
|
(34.0 |
) |
|
|
|
13.6 |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at beginning of period |
|
|
|
123.0 |
|
|
|
|
106.3 |
|
| Cash and cash equivalents at end of period |
|
|
$ |
89.0 |
|
|
|
$ |
119.9 |
|
|
|
|
|
|
|
|
|
| Supplemental cash flow disclosures: |
|
|
|
|
|
|
|
Cash paid for interest |
|
|
$ |
(0.9 |
) |
|
|
$ |
(1.6 |
) |
|
Net cash paid for income taxes |
|
|
|
(85.8 |
) |
|
|
|
(88.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| SNAP-ON INCORPORATED |
| Condensed Consolidated Statements of Cash Flows |
| (Amounts in millions) |
| (unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
July 1, |
|
|
July 2, |
|
|
|
|
2017 |
|
|
2016 |
| Operating activities: |
|
|
|
|
|
|
| Net earnings |
|
|
$ |
301.9 |
|
|
|
$ |
274.7 |
|
| Adjustments to reconcile net earnings to net cash provided (used) by |
|
|
|
|
|
|
|
operating activities: |
|
|
|
|
|
|
|
Depreciation |
|
|
|
32.3 |
|
|
|
|
30.4 |
|
|
Amortization of other intangibles |
|
|
|
13.6 |
|
|
|
|
12.3 |
|
|
Provision for losses on finance receivables |
|
|
|
25.8 |
|
|
|
|
19.6 |
|
|
Provision for losses on non-finance receivables |
|
|
|
4.6 |
|
|
|
|
4.7 |
|
|
Stock-based compensation expense |
|
|
|
14.4 |
|
|
|
|
14.2 |
|
|
Deferred income tax provision (benefit) |
|
|
|
3.1 |
|
|
|
|
(5.7 |
) |
|
Gain on sales of assets |
|
|
|
(0.2 |
) |
|
|
|
- |
|
|
Settlement of treasury lock |
|
|
|
14.9 |
|
|
|
|
- |
|
| Changes in operating assets and liabilities, net of effects of
acquisitions: |
|
|
|
|
|
|
|
Increase in trade and other accounts receivable |
|
|
|
(26.8 |
) |
|
|
|
(5.8 |
) |
|
Increase in contract receivables |
|
|
|
(5.6 |
) |
|
|
|
(5.5 |
) |
|
Increase in inventories |
|
|
|
(48.3 |
) |
|
|
|
(12.0 |
) |
|
Increase in prepaid and other assets |
|
|
|
(9.9 |
) |
|
|
|
(24.8 |
) |
|
Increase in accounts payable |
|
|
|
27.7 |
|
|
|
|
24.1 |
|
|
Decrease in accruals and other liabilities |
|
|
|
(28.0 |
) |
|
|
|
(22.5 |
) |
| Net cash provided by operating activities |
|
|
|
319.5 |
|
|
|
|
303.7 |
|
|
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
|
|
Additions to finance receivables |
|
|
|
(458.8 |
) |
|
|
|
(475.1 |
) |
|
Collections of finance receivables |
|
|
|
352.9 |
|
|
|
|
341.4 |
|
|
Capital expenditures |
|
|
|
(34.4 |
) |
|
|
|
(40.1 |
) |
|
Acquisitions of businesses, net of cash acquired |
|
|
|
(80.2 |
) |
|
|
|
- |
|
|
Disposals of property and equipment |
|
|
|
0.9 |
|
|
|
|
1.4 |
|
|
Other |
|
|
|
(0.7 |
) |
|
|
|
(2.5 |
) |
| Net cash used by investing activities |
|
|
|
(220.3 |
) |
|
|
|
(174.9 |
) |
|
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
|
297.8 |
|
|
|
|
- |
|
|
Repayment of long-term debt |
|
|
|
(150.0 |
) |
|
|
|
- |
|
|
Repayments of notes payable |
|
|
|
- |
|
|
|
|
(0.8 |
) |
|
Net increase (decrease) in other short-term borrowings |
|
|
|
(52.7 |
) |
|
|
|
7.4 |
|
|
Cash dividends paid |
|
|
|
(82.3 |
) |
|
|
|
(70.9 |
) |
|
Purchases of treasury stock |
|
|
|
(122.5 |
) |
|
|
|
(58.5 |
) |
|
Proceeds from stock purchase and option plans |
|
|
|
34.6 |
|
|
|
|
28.4 |
|
|
Other |
|
|
|
(14.9 |
) |
|
|
|
(7.5 |
) |
| Net cash used by financing activities |
|
|
|
(90.0 |
) |
|
|
|
(101.9 |
) |
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash
equivalents |
|
|
|
2.2 |
|
|
|
|
0.2 |
|
| Increase in cash and cash equivalents |
|
|
|
11.4 |
|
|
|
|
27.1 |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at beginning of year |
|
|
|
77.6 |
|
|
|
|
92.8 |
|
| Cash and cash equivalents at end of period |
|
|
$ |
89.0 |
|
|
|
$ |
119.9 |
|
|
|
|
|
|
|
|
|
| Supplemental cash flow disclosures: |
|
|
|
|
|
|
|
Cash paid for interest |
|
|
$ |
(24.9 |
) |
|
|
$ |
(25.5 |
) |
|
Net cash paid for income taxes |
|
|
|
(99.8 |
) |
|
|
|
(106.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
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") 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 |
| Non-GAAP Supplemental Consolidating Data - Condensed Statements of
Earnings |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations* |
|
|
Financial Services |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
July 1, |
|
July 2, |
|
|
July 1, |
|
July 2, |
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
|
$ |
921.4 |
|
|
$ |
872.3 |
|
|
|
$ |
- |
|
|
$ |
- |
|
| Cost of goods sold |
|
|
|
(458.4 |
) |
|
|
(441.0 |
) |
|
|
|
- |
|
|
|
- |
|
| Gross profit |
|
|
|
463.0 |
|
|
|
431.3 |
|
|
|
|
- |
|
|
|
- |
|
| Operating expenses |
|
|
|
(279.3 |
) |
|
|
(264.9 |
) |
|
|
|
- |
|
|
|
- |
|
| Operating earnings before financial services |
|
|
|
183.7 |
|
|
|
166.4 |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
| Financial services revenue |
|
|
|
- |
|
|
|
- |
|
|
|
|
77.7 |
|
|
|
69.3 |
|
| Financial services expenses |
|
|
|
- |
|
|
|
- |
|
|
|
|
(23.1 |
) |
|
|
(19.8 |
) |
| Operating earnings from financial services |
|
|
|
- |
|
|
|
- |
|
|
|
|
54.6 |
|
|
|
49.5 |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings |
|
|
|
183.7 |
|
|
|
166.4 |
|
|
|
|
54.6 |
|
|
|
49.5 |
|
| Interest expense |
|
|
|
(12.9 |
) |
|
|
(12.8 |
) |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
| Intersegment interest income (expense) – net |
|
|
|
17.9 |
|
|
|
18.3 |
|
|
|
|
(17.9 |
) |
|
|
(18.3 |
) |
| Other income (expense) – net |
|
|
|
(1.9 |
) |
|
|
1.2 |
|
|
|
|
- |
|
|
|
- |
|
| Earnings before income taxes and equity earnings |
|
|
|
186.8 |
|
|
|
173.1 |
|
|
|
|
36.6 |
|
|
|
31.1 |
|
| Income tax expense |
|
|
|
(53.7 |
) |
|
|
(50.7 |
) |
|
|
|
(13.6 |
) |
|
|
(11.5 |
) |
| Earnings before equity earnings |
|
|
|
133.1 |
|
|
|
122.4 |
|
|
|
|
23.0 |
|
|
|
19.6 |
|
| Financial services – net earnings |
|
|
|
|
|
|
|
|
|
|
| attributable to Snap-on |
|
|
|
23.0 |
|
|
|
19.6 |
|
|
|
|
- |
|
|
|
- |
|
| Equity earnings, net of tax |
|
|
|
0.7 |
|
|
|
1.4 |
|
|
|
|
- |
|
|
|
- |
|
| Net earnings |
|
|
|
156.8 |
|
|
|
143.4 |
|
|
|
|
23.0 |
|
|
|
19.6 |
|
| Net earnings attributable to noncontrolling interests |
|
|
|
(3.6 |
) |
|
|
(3.3 |
) |
|
|
|
- |
|
|
|
- |
|
| Net earnings attributable to Snap-on |
|
|
$ |
153.2 |
|
|
$ |
140.1 |
|
|
|
$ |
23.0 |
|
|
$ |
19.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Snap-on with Financial Services on the equity method.
|
| |
| SNAP-ON INCORPORATED |
| Non-GAAP Supplemental Consolidating Data - Condensed Statements of
Earnings |
| (Amounts in millions) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations* |
|
|
Financial Services |
|
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
July 1, |
|
July 2, |
|
|
July 1, |
|
July 2, |
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
|
$ |
1,808.5 |
|
|
$ |
1,706.5 |
|
|
|
$ |
- |
|
|
$ |
- |
|
| Cost of goods sold |
|
|
|
(897.5 |
) |
|
|
(859.9 |
) |
|
|
|
- |
|
|
|
- |
|
| Gross profit |
|
|
|
911.0 |
|
|
|
846.6 |
|
|
|
|
- |
|
|
|
- |
|
| Operating expenses |
|
|
|
(557.8 |
) |
|
|
(524.8 |
) |
|
|
|
- |
|
|
|
- |
|
| Operating earnings before financial services |
|
|
|
353.2 |
|
|
|
321.8 |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
| Financial services revenue |
|
|
|
- |
|
|
|
- |
|
|
|
|
154.5 |
|
|
|
135.6 |
|
| Financial services expenses |
|
|
|
- |
|
|
|
- |
|
|
|
|
(47.4 |
) |
|
|
(39.1 |
) |
| Operating earnings from financial services |
|
|
|
- |
|
|
|
- |
|
|
|
|
107.1 |
|
|
|
96.5 |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings |
|
|
|
353.2 |
|
|
|
321.8 |
|
|
|
|
107.1 |
|
|
|
96.5 |
|
| Interest expense |
|
|
|
(25.5 |
) |
|
|
(25.8 |
) |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
| Intersegment interest income (expense) – net |
|
|
|
35.4 |
|
|
|
35.6 |
|
|
|
|
(35.4 |
) |
|
|
(35.6 |
) |
| Other income (expense) – net |
|
|
|
(3.6 |
) |
|
|
0.5 |
|
|
|
|
- |
|
|
|
- |
|
| Earnings before income taxes and equity earnings |
|
|
|
359.5 |
|
|
|
332.1 |
|
|
|
|
71.5 |
|
|
|
60.7 |
|
| Income tax expense |
|
|
|
(103.4 |
) |
|
|
(97.4 |
) |
|
|
|
(26.5 |
) |
|
|
(22.4 |
) |
| Earnings before equity earnings |
|
|
|
256.1 |
|
|
|
234.7 |
|
|
|
|
45.0 |
|
|
|
38.3 |
|
| Financial services – net earnings |
|
|
|
|
|
|
|
|
|
|
| attributable to Snap-on |
|
|
|
45.0 |
|
|
|
38.3 |
|
|
|
|
- |
|
|
|
- |
|
| Equity earnings, net of tax |
|
|
|
0.8 |
|
|
|
1.7 |
|
|
|
|
- |
|
|
|
- |
|
| Net earnings |
|
|
|
301.9 |
|
|
|
274.7 |
|
|
|
|
45.0 |
|
|
|
38.3 |
|
| Net earnings attributable to noncontrolling interests |
|
|
|
(7.1 |
) |
|
|
(6.3 |
) |
|
|
|
- |
|
|
|
- |
|
| Net earnings attributable to Snap-on |
|
|
$ |
294.8 |
|
|
$ |
268.4 |
|
|
|
$ |
45.0 |
|
|
$ |
38.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Snap-on with Financial Services on the equity method.
|
| |
| SNAP-ON INCORPORATED |
| Non-GAAP Supplemental Consolidating Data - Condensed Balance
Sheets |
| (Amounts in millions) |
| (unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations* |
|
|
Financial Services |
|
|
|
|
|
|
|
July 1, |
|
December 31, |
|
|
July 1, |
|
December 31, |
|
|
|
|
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
88.9 |
|
$ |
77.5 |
|
|
$ |
0.1 |
|
$ |
0.1 |
|
Intersegment receivables |
|
|
|
19.8 |
|
|
15.0 |
|
|
|
- |
|
|
- |
|
Trade and other accounts receivable – net |
|
|
|
644.6 |
|
|
598.2 |
|
|
|
0.7 |
|
|
0.6 |
|
Finance receivables – net |
|
|
|
- |
|
|
- |
|
|
|
496.5 |
|
|
472.5 |
|
Contract receivables – net |
|
|
|
8.0 |
|
|
7.9 |
|
|
|
74.4 |
|
|
80.2 |
|
Inventories – net |
|
|
|
601.4 |
|
|
530.5 |
|
|
|
- |
|
|
- |
|
Prepaid expenses and other assets |
|
|
|
125.3 |
|
|
122.4 |
|
|
|
1.4 |
|
|
1.1 |
|
|
Total current assets |
|
|
|
1,488.0 |
|
|
1,351.5 |
|
|
|
573.1 |
|
|
554.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment – net |
|
|
|
461.9 |
|
|
423.8 |
|
|
|
1.5 |
|
|
1.4 |
|
Investment in Financial Services |
|
|
|
302.7 |
|
|
288.7 |
|
|
|
- |
|
|
- |
|
Deferred income tax assets |
|
|
|
46.6 |
|
|
49.1 |
|
|
|
25.2 |
|
|
23.7 |
|
Intersegment long-term notes receivable |
|
|
|
508.4 |
|
|
584.7 |
|
|
|
- |
|
|
- |
|
Long-term finance receivables – net |
|
|
|
- |
|
|
- |
|
|
|
998.6 |
|
|
934.5 |
|
Long-term contract receivables – net |
|
|
|
11.3 |
|
|
11.2 |
|
|
|
288.1 |
|
|
275.5 |
|
Goodwill |
|
|
|
899.2 |
|
|
895.5 |
|
|
|
- |
|
|
- |
|
Other intangibles – net |
|
|
|
256.3 |
|
|
184.6 |
|
|
|
- |
|
|
- |
|
Other assets |
|
|
|
52.8 |
|
|
47.9 |
|
|
|
0.1 |
|
|
0.1 |
| Total assets |
|
|
$ |
4,027.2 |
|
$ |
3,837.0 |
|
|
$ |
1,886.6 |
|
$ |
1,789.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
Notes payable and current maturities of long-term debt |
|
|
$ |
100.2 |
|
$ |
151.4 |
|
|
$ |
250.0 |
|
$ |
150.0 |
|
Accounts payable |
|
|
|
201.6 |
|
|
170.3 |
|
|
|
0.7 |
|
|
0.6 |
|
Intersegment payables |
|
|
|
- |
|
|
- |
|
|
|
19.8 |
|
|
15.0 |
|
Accrued benefits |
|
|
|
43.7 |
|
|
52.8 |
|
|
|
- |
|
|
- |
|
Accrued compensation |
|
|
|
67.0 |
|
|
85.7 |
|
|
|
2.5 |
|
|
4.1 |
|
Franchisee deposits |
|
|
|
65.7 |
|
|
66.7 |
|
|
|
- |
|
|
- |
|
Other accrued liabilities |
|
|
|
317.7 |
|
|
292.1 |
|
|
|
31.9 |
|
|
22.8 |
|
|
Total current liabilities |
|
|
|
795.9 |
|
|
819.0 |
|
|
|
304.9 |
|
|
192.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and intersegment long-term debt |
|
|
|
- |
|
|
- |
|
|
|
1,264.0 |
|
|
1,293.5 |
|
Deferred income tax liabilities |
|
|
|
21.9 |
|
|
13.1 |
|
|
|
- |
|
|
- |
|
Retiree health care benefits |
|
|
|
35.1 |
|
|
36.7 |
|
|
|
- |
|
|
- |
|
Pension liabilities |
|
|
|
213.9 |
|
|
246.5 |
|
|
|
- |
|
|
- |
|
Other long-term liabilities |
|
|
|
87.4 |
|
|
86.5 |
|
|
|
15.0 |
|
|
15.0 |
|
|
Total liabilities |
|
|
|
1,154.2 |
|
|
1,201.8 |
|
|
|
1,583.9 |
|
|
1,501.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity attributable to Snap-on |
|
|
|
2,854.9 |
|
|
2,617.2 |
|
|
|
302.7 |
|
|
288.7 |
|
Noncontrolling interests |
|
|
|
18.1 |
|
|
18.0 |
|
|
|
- |
|
|
- |
|
|
Total equity |
|
|
|
2,873.0 |
|
|
2,635.2 |
|
|
|
302.7 |
|
|
288.7 |
| Total liabilities and equity |
|
|
$ |
4,027.2 |
|
$ |
3,837.0 |
|
|
$ |
1,886.6 |
|
$ |
1,789.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Snap-on 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/20170720005253/en/