GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

SnapOn Inc. Reports Operating Results (10-K)

February 16, 2012 | About:

10qk

18 followers
SnapOn Inc. (SNA) filed Annual Report for the period ended 2011-12-31.

Snapon Inc. has a market cap of $3.55 billion; its shares were traded at around $60.48 with a P/E ratio of 13.5 and P/S ratio of 1.2. The dividend yield of Snapon Inc. stocks is 2.2%. Snapon Inc. had an annual average earning growth of 14.5% over the past 10 years.

Highlight of Business Operations:

In the Commercial & Industrial Group, segment net sales of $1,125.8 million in 2011 increased $77.6 million, or 7.4%, from 2010 levels. Excluding $30.6 million of favorable foreign currency translation, organic (excluding foreign currency translation effects) sales in 2011 increased $47.0 million, or 4.4%, as continued higher sales to a wide range of customers in emerging markets and critical industries were partially offset by expected lower sales to the military and ongoing weakness in Europe, particularly in the southern regions. Operating earnings of $123.4 million in 2011 increased $6.5 million, or 5.6%, from 2010 levels primarily due to higher sales and continued savings from RCI and restructuring initiatives. In 2011 and 2010, the Commercial & Industrial Group incurred $5.6 million and $5.2 million, respectively, of restructuring costs, primarily intended to improve the segments cost structure in Europe.

Consolidated operating earnings of $475.1 million in 2011 increased $143.7 million, or 43.4%, from $331.4 million in 2010. The $143.7 million year-over-year increase includes $76.5 million of higher earnings from financial services (including the $18.0 million arbitration settlement gain mentioned above) and $10.9 million of favorable foreign currency effects. As a percentage of revenues (net sales plus financial services revenue), operating earnings in 2011 of 16.0% improved 360 basis points compared to 12.4% last year.

Gross profit of $1,211.1 million in 2010 increased $153.5 million, or 14.5%, as compared to $1,057.6 million in 2009. As a percentage of sales, gross margin of 46.2% in 2010 improved 140 basis points from 44.8% in 2009 primarily due to $21.6 million of savings from ongoing RCI initiatives, $17.5 million of favorable foreign currency effects and $4.7 million of lower restructuring costs. The 2010 gross margin also benefited from favorable manufacturing utilization as a result of increased production levels; in 2009, the company incurred costs to carry excess manufacturing capacity, primarily in Europe, as a result of lower demand and inventory reduction efforts. These improvements in year-over-year gross margin were partially offset by $10.9 million of lower year-over-year last in, first out (LIFO) related inventory valuation benefits ($1.0 million of LIFO-related expense in 2010 and $9.9 million of LIFO-related benefits in 2009). The LIFO-related inventory benefits in 2009 resulted from inventory reductions, including as a result of increased liquidations and disposals of slow-moving and excess inventories, as the company adjusted its production and inventory levels in response to weakened consumer and business demand during the continued global economic downturn. Restructuring costs included in gross profit totaled $10.8 million in 2010 as compared to $15.5 million in 2009.

Operating expenses of $894.1 million in 2010 increased $69.7 million, or 8.5%, as compared to $824.4 million in 2009. As a percentage of sales, operating expenses of 34.1% in 2010 improved 80 basis points from 34.9% in 2009 primarily due to sales volume leverage, $12.6 million of savings from ongoing RCI initiatives, $7.5 million of lower bad debt expense and $2.9 million of lower restructuring costs. These year-over-year improvements were partially offset by $19.3 million of higher performance-based incentive compensation expense, $16.3 million of increased pension expense (largely due to the ongoing amortization of investment losses incurred in 2008 related to the companys domestic pension plan assets) and $7.5 million of higher stock-based (mark-to-market) compensation expense. Restructuring costs included in operating expenses totaled $3.4 million in 2010 as compared to $6.3 million in 2009.

Segment operating expenses of $225.6 million in 2010 increased $2.2 million, or 1.0%, from 2009 levels. As a percentage of sales, operating expenses of 26.6% in 2010 improved 210 basis points from 28.7% in 2009 primarily due to $6.8 million of savings from ongoing RCI initiatives, $1.3 million of lower restructuring costs and $0.9 million of favorable foreign currency effects. Operating expenses in 2010 also benefited from $5.4 million of lower year-over-year bad debt expense; in 2009, the segment incurred higher bad debt expense primarily related to increased credit exposure at North American automotive dealerships. These year-over-year improvements were partially offset by higher product development and other expenses. Restructuring costs included in operating expenses totaled $1.9 million in 2010 as compared to $3.2 million in 2009.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 5.0/5 (1 vote)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK