Snap-on Inc. (SNA, Financial) released its first-quarter financial results before the market opened on April 18. While the tool and equipment manufacturer posted softer sales, its earnings edged past projections.
By the numbers
The company recorded GAAP earnings of $3.16 per share, a 12.1% gain year over year. Quarterly revenue declined 1.5% to $921.7 million due to unfavorable foreign currency exhange rates.
Snap-on saw lopsided sales growth across its business segments. The tools group generated $410.2 million in sales, an increase of $5.5 million. On the other hand, the repair systems and information group saw sales decrease by $9 mllion from the year-ago quarter to $327.9 million.
Regardless, the company witnessed 1.4% organic sales growth. Adjusted operating income grew 1.4% to $237.9 million, while the adjusted operating margin increased 60 basis points to 23.6%.
In a statement, CEO Nick Pinchuk commented on the company’s performance:
"We are encouraged by our first quarter 2019 results, which included a continuing recovery in our U.S. franchise network, with a mid single-digit sales gain in that operation," he said.
At the end of the first quarter, Snap-on’s balance of cash and cash equivalents amounted to $156.4 million. Long-term debt was $946.7 million.
Segment performance
The Commercial and Industrial Group's sales totaled $322.5 million, down 2.7% year over year. Organic sales rose 1.5%, which indicated strong growth in the specialty tools business as well as robust sales to critical industries. This improvement was only partially offset by declining sales in the Asia-Pacific region.
The tools business saw sales growth of 1.4% to $410.2 million. That also included organic sales growth of 2.9%, which was attributable to rising sales in the U.S. franchise business, only partially offset by a decline in overseas operations.
Revenue of $327.9 million for the Repair Systems & Information Group was down 2.7% on currency headwinds. Due to poor sales of undercar equipment, the segment’s organic sales dipped 0.5%, though it saw increased sales to original equipment manufaturers.
Looking forward
Apart from expanding its customer base, the company is moving into the automotive repair arena. Snap-on projects capital spending of $90 million to $100 million in 2019, of which it has already spent $20.2 million in the first quarter.
Disclosure: I do not hold any positions in the stocks mentioned.
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