Snap-on Inc. SNA reported strong first-quarter 2015 results with healthy growth in net sales and earnings. Net earnings per share of $1.87 surpassed the Zacks Consensus Estimate of $1.83 per share by 2.2% and the year-ago figure of $1.62 by 15.4%.
Quarterly earnings benefitted from the company’s improved operational performance across all segments.
Inside the Headlines
Net sales in the first quarter increased 5.1% year over year to $827.8 million and were marginally above the Zacks Consensus Estimate of $827 million. Excluding acquisition related expenses and favorable foreign currency translation effect, organic sales rose 9.9% year over year.
As per the segments, the Commercial & Industrial Group segment sales increased 2.4% year over year to $297.5 million on higher sales in European-based hand tools business and higher volumes with critical industries’ customers. Organic sales also increased 9.8% year over year.
The Snap-on Tools Group segment revenues improved 10.1% year over year to $378.2 million, driven by significant gains in both the U.S. and international franchise operations. Meanwhile, organic sales were up 12.9%.
The Repair Systems & Information segment recorded a sales increase of 3.7% year over year to $272.3 million, primarily on higher sales to OEM dealership service and increased sales of undercar equipments and diagnostic and repair information products. Meanwhile, organic sales were up 6.3% year over year.
On the other hand, Financial Services business reported revenues of $57.4 million compared with $50.2 million in the year-ago quarter.
Also, gross profit for the first quarter was $410.1 million, up from $378.7 million in the prior-year quarter.
Liquidity
At the end of the first quarter, cash and cash equivalents totaled $114.4 million compared with $132.9 million at the end of 2014. The company had long-term debt of $864.4 million compared to $862.7 million at the end of 2014.
Our Take
Keeping its winning streak alive, Snap-on came up with another earnings beat on the back of its focus on enhancing van network, extending service to critical industries, strategic acquisitions and expanding in emerging markets. Along with this, the company expects the successful deployment of Snap-on Value Creation Processes to benefit its 2015 financials too.
Owing to these initiatives, Snap-on expects to incur capital expenditures in the range of $80–$90 million this year. Moreover, the company expects the effective income tax rate for 2015 to be at or below its 2014 rate. Snap-on currently has a Zacks Rank #2 (Buy).
We are now looking forward to the earnings release of other companies in the space that are going to report next week. These include KBR, Inc. KBR, Flowserve Corp. FLS and Fluor Corp. FLR.
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