Snap-on Inc. ( SNA Quick Quote SNA - Free Report) has posted impressive fourth-quarter 2021 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate and advanced year over year. Despite the ongoing pandemic-related disruptions, inflationary pressures and supply-chain challenges, results gained from continued positive business momentum and contributions from its Value Creation plan. The company also noted that it progressed well beyond the pre-pandemic level of 2019 for the sixth successive time. Management also remains on track with its Rapid Continuous Improvement (RCI) process and other cost-reduction initiatives. Shares of VFC have gained 14.4% in a year compared with the industry's 8.2% growth.
Image Source: Zacks Investment Research Q4 Highlights
Snap-on’s adjusted earnings of $4.10 per share in fourth-quarter 2021 beat the Zacks Consensus Estimate of $3.69. The figure was up 7.3% and 33.1% from adjusted earnings of $3.82 and $3.08 per share reported in fourth-quarter 2020 and 2019, respectively.
Net sales grew 3.2% to $1,108.3 million and beat the Zacks Consensus Estimate of $1,098 million. The uptick can be attributed to organic sales growth of 2.3% and $12.2 million in contributions from acquisitions, which somewhat offset the $3-million negative impact of foreign-currency translations. The top line also advanced 16% from fourth-quarter 2019’s reported figure of $955.2 million, driven by organic sales growth of 13%, gains from acquisitions of $20.9 million and $7.1 million of positive impact from foreign currency. The adjusted gross profit was $533.4 million, up 3.3% year over year, while the adjusted gross margin remained almost flat year over year at 48.1% in the reported quarter. The company’s adjusted operating earnings before financial services totaled $232.2 million, up 7% year over year. The metric, as a percentage of sales, expanded 80 bps to 21% in the quarter under review. Segmental Details
Commercial & Industrial Group decreased 1.6% from the prior-year quarter to $358.7 million, driven by an organic sales decline of 0.4% and a positive impact of $4.1 million from unfavorable foreign currency. However, the top line improved 1.6% from $352.9 million in fourth-quarter 2019 on the back of $8.7 million of contributions from acquisitions and $3.8 million of favorable foreign currency, which offset an organic sales decline of 1.9%. The Tools Group segment’s sales rose 2% year over year to $504.8 million, driven by organic sales growth of 1.6% and a $2-million positive impact of foreign currency. Robust activity in the U.S. franchise business offset drab international operations. Sales in the segment grew 22.6% from $411.7 million in fourth-quarter 2019, owing to 21.5% organic sales growth and $3.9 million from favorable currency movement. Sales in Repair Systems & Information Group advanced 8.7% year over year to $392.5 million. Organic sales in the segment rose 5.5% from the year-ago quarter, with $12.2 million in gains from acquisitions, which somewhat offset a $0.5-million negative impact from foreign currency. Strength in diagnostics and repair information products to independent repair shop owners and managers, and a rise in sales of under-car equipment contributed to segment growth. The top line witnessed growth of 17.2% from fourth-quarter 2019, driven by organic sales growth of 13%, a positive currency impact of $1.6 million and $12.2 million of gains from acquisitions. The Financial Services business reported revenues of $86.9 million, down from $93.4 million in the year-ago quarter. Financials
As of Jan 1, 2022, Snap-on’s cash and cash equivalents totaled $780 million, with long-term debt of $1,182.9 million and $4,181.9 million in shareholders’ equity.
The Zacks Rank #4 (Sell) company continues to reel under potential threats of new COVID-19 variants and supply-chain headwinds. It remains focused on expanding the customer base, particularly in the automotive repair and critical industries. As a result, the capital expenditure for 2022 is projected to be $90-$100 million.
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