Snap-On Inc. (SNA) reported earnings from continuing operations of 80 cents per share for the third quarter of 2010, exceeding the Zacks Consensus Estimate of 65 cents.
Revenues of $653.1 million increased by $71.3 million, or 12.3%, from the corresponding prior-year period.
Segment Results
Commercial & Industrial Group segment revenues of $261 million in the third quarter increased $42.5 million, or 19.5%, from the year-ago period. This reflected continued growth in all divisions, especially those serving key industries and emerging economies. Excluding foreign currency translation effects, organic revenues increased 21.2%.
Snap-on Tools Group segment sales of $258.7 million in the quarter increased $25.3 million, or 10.8%, from the corresponding prior-year period. Excluding foreign currency translation, organic sales increased 10.7%, which reflected robust 12.8% growth in the U.S.
Repair Systems & Information Group segment sales of $207.4 million in the quarter increased $15.5 million, or 8.1%, from the prior-year period. This was due to higher global sales of equipment, tools and facilitation programs.
Financial Services operating earnings were $5.0 million on $17.2 million in revenues in the quarter as compared with an operating loss of $5.3 million on $6.0 million in revenues last year. On July 16, 2009, Snap-on terminated its financial services operating agreement with CIT Group Inc. (CIT) relating to the Snap-on Credit LLC (“SOC”) joint venture.
Outlook
Snap-On presently expects that full-year 2010 restructuring costs will approximate $15 million. The company currently expects full-year 2010 capital expenditures to be around $45 million.
Over the past few years, management has focused on delivering a more predictable and consistent financial performance. To this end, management implemented the ‘Driven to Deliver’ strategy in 2001, which resulted in an increased focus on customer relationships and business processes. In addition, the company has invested in new products and increased brand awareness.
In early 2005, management introduced the Rapid Continuous Improvement process, which is designed to improve organizational effectiveness and lower costs, including working capital requirements. As a result, asset utilization has improved by rationalizing production through plant closures, and working capital has been used more effectively.
Headquartered in Kenosha, Wisconsin, Snap-on is a global provider of professional tools, equipment, and related solutions for technicians, vehicle service centers, original equipment manufacturers and other industrial users.
We currently have a Neutral recommendation on Snap-On Inc.
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