Snap-On Beats Estimates

Snap-On Incorporated (SNA) reported revenues of $736.6 million for the fourth quarter of 2011, up 5.7% from the 2010 levels. Excluding $1.5 million of favorable foreign currency translation, organic revenues increased 5.9%.

Net earnings of $74.3 million or $1.27 per diluted share increased from $57.9 million or 99 cents per diluted share a year ago. This was above $1.17 as per the Zacks Consensus Estimate.

Gross profit was $335.8 million and margin was almost flat at 45.6% of revenues, compared to 45.7% a year ago.

Operating expenses of $232.0 million in the quarter increased $1 million from 2010 levels, largely due to higher volume related expenses.

Segment Details

Commercial and Industrial Group revenues of $295.4 million for the fourth quarter improved 4.9% from 2010 levels. During the quarter, the segment had foreign currency translation worth $0.2 million.

Revenues in Snap-on Tools Group increased 9.2% year-over-year to $292.8 million, largely due to continued higher sales in the United States. On an organic basis (excluding $0.3 million unfavorable currency impact), sales were up 9.3%.

Repair Systems & Information Group sales of $236.5 million increased 2.0% year over year. Excluding currency translation, organic sales increased 2.4%, reflecting higher sales to repair shop owners and managers.

Financial Services operating earnings of $22.1 million in the fourth quarter on revenue of $35.5 million compared to operating earnings of $9.4 million on revenue of $21.5 million in the prior-year period. The increase was driven by continued growth of the on-book finance portfolio. 

Balance Sheet and Cash Flow

Exiting the year, cash and cash equivalents declined to $185.6 million compared to $572.2 million in January 2011. Net cash provided by operating activities increased to $72.3 million from $64.3 million in the prior year period.

The company had long term debt of $967.9 million with a debt to capitalization ratio of 38.5%.

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. The Home Depot, Inc (HD) is a major competitor. Snap-On currently has a Zacks Rank# 3, which implies short term (1-3 months) ‘Hold’ rating on the stock.

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