Snap-on No Compromise Tour stops off in Kenosha, WI

This was a very nice event, hosted by Snap-on World Headquarters in Kenosha, WI. I think it may have been partly sponsored by several local Snap-on Distributors. It was a beautiful day yesterday. The heavy rains from the day before had passed through, leaving a perfect afternoon to spend outside, looking at cool cars, cool tools and other Snap-on products.

This is a car from Carbon Motors, currently in development for U.S. police departments across the country. Very cutting edge, they spoke with thousands of police officials and developed this car for them from the ground up, coming up with a total of 11,000 solutions to problems the police officers faced in their current vehicles. Snap-on is working with Carbon Motors on additional solutions.

AMC Javelin (thanks Jack!)

Inside Snap-on's Innovation Center, you'll find continually changing exhibits, similar to this.

Meanwhile, while I was getting a tour of the inside facilities, the Snap-on associates were enjoying hot dogs and hamburgers with their co-workers.

This is the back end of a 1957 Chevy. Note the Snap-on wrenches. More photos of this amazing car to come in tomorrow's post. The use of Snap-on tools was quite clever.

Snap-on NO COMPROMISE Tour

The Snap-on NO COMPROMISE Tour is headed to Kenosha next week and so am I. Assuming there are no issues between CLE and ORD airports, I'll have a nice early start on the day. Should be a beautiful day for a drive from the Chicago airport up to Kenosha...


What is the NO COMPROMISE Tour you ask? It's venue that Snap-on developed to bring tools to the public. And, after a year of traveling the country, The Snap-on Tour is headed home to Kenosha, WI with a tour stop scheduled for August 18 at Snap-on World HQ.


It will be open to the public from 4 to 8 p.m. As a special added bonus, the renowned Ring Brothers will have their 2008 Hot Rod of the Year Camaro on display and NHRA Nitro Funny Car drivers Cruz and Tony Pedregon will be on hand from 4 to 5 to sign autographs.


The Tour was developed to provide visitors with the opportunity to speak with Snap-on officials about how Snap-on Toos can help them get the job done faster and easier. Alicia Smales, VP of marketing for SO says, "the NO COMPROMISE TOUR is designed to give "Snap-on Nation" an interactive opportunity to see the newest and most exciting products Snap-on has to offer. We wanted to create an informative, but fun, traveling tour that would appeal to everyone and I know we have accomplished that with the NO COMPROMISE TOUR." (sorry, I'm not yelling that at the top of my lungs, that is just how all their PR prints it out with a TM next to it.)


So - any questions you want me to ask the Snap-on officials that will be on hand? I already have a few of my own ready, but will be happy to add yours to the list and report back next week!

Snap-on Announces 2nd Qtr 2009 Results

Snap-on Announces Second Quarter 2009 Results, July 31, 2009, as reported by aftermarketNews staff.

Company says investment in strategic growth opportunities continues.

KENOSHA, Wis. -- Snap-on has announced operating results for the second quarter of 2009.

• Sales of $590 million were up 3 percent sequentially from first quarter levels, but down 23 percent compared to last year. Without the effects of currency, sales were up 0.8 percent sequentially, but down 16.4 percent year over year.
• Operating earnings of $70.3 million increased $6 million, or 9.3 percent, over first quarter 2009 on essentially flat sales levels as improved operating performance and higher financial services income were partially offset by $6.6 million of higher restructuring costs. As a percentage of revenues, operating earnings improved to 11.4 percent from 10.9 percent in the first quarter. Restructuring costs in the second quarter of $8.6 million reduced the operating margin by approximately 140 basis points. Operating earnings in the second quarter of 2008 were $111.7 million on significantly higher sales volumes.
• Cash flow from operations of $155.6 million increased significantly from $14.7 million in the first quarter of 2009 and $80.5 million in the second quarter of 2008 primarily due to working capital improvements principally as a result of increased emphasis on inventory reduction.
• Net earnings attributable to Snap-on of $37.4 million, or 65 cents per diluted share, increased $2.6 million, or 5 cents per diluted share, over first quarter 2009 levels. Net earnings attributable to Snap-on in the second quarter of 2008 were $66.9 million, or $1.15 per diluted share.

“There were a number of encouraging signs in the second quarter, particularly the sequential improvements for our Snap-on Tools and Diagnostics & Information businesses,” said Nick Pinchuk, Snap-on chairman, president and CEO. “The deepening of the recession across most European economies and the spreading of economic weakness to other industries had a more severe impact on us in the second quarter, particularly for the Commercial & Industrial Group. Nevertheless, sales and operating income for the overall corporation did improve sequentially from the first quarter. “As we said previously, we continue to drive cost-reduction initiatives, and in the second quarter took a number of actions resulting in $8.6 million of restructuring costs, with $6.7 million related to the Commercial & Industrial Group. In addition, we continue our investment in the selected strategic growth areas that we believe will be decisive in our future. As a result, we believe Snap-on is making significant quarter-by-quarter strategic progress and will emerge from this downturn in a stronger position. Going forward, we will continue to aggressively manage the balance between investing in growth opportunities and acting on rapid continuous improvement and our other value creation initiatives. In the near term, Snap-on anticipates no significant change in the economic climate. Snap-on is continuously responding to the global macroeconomic challenges by furthering its RCI and cost reduction initiatives.

In the first six months of 2009, Snap-on incurred $10.6 million of restructuring costs, including $8.6 million in the second quarter, and presently anticipates that full-year 2009 restructuring costs will be in a range of $20 million to $24 million, up from the previously communicated range of $14 million to $18 million.

Snap-on is also proceeding with several of its planned growth investments, including further expansion of its manufacturing capacity in China and in Eastern Europe, both of which are proceeding on schedule. Snap-on continues to expect that full-year capital expenditures will be in a range of $60 million to $70 million. On July 16, Snap-on terminated the financial services operating agreement that it had with The CIT Group, relating to the parties’ Snap-on Credit LLC (SOC) joint venture. Previously, the company recorded gains on contracts sold to CIT as financial services revenue. The company presently expects that operating income from financial services, which is before interest expense and which totaled $16.6 million in the second quarter of 2009, will be a loss in a range of $8 million to $10 million in each of the third and fourth quarters of 2009. Snap-on estimates that its incremental financing needs for SOC will approximate $450 million over the next 12 months. Snap-on believes that it has sufficient available cash on hand, cash flow from operating activities and available credit facilities, including access to public debt markets, to fund the financing needs of SOC.

Snap-on continues to expect approximately $3 million per quarter of higher year-over-year pension expense in 2009 due to declines in pension asset values. For the first six months of 2009, foreign currency effects reduced year-over-year operating earnings by $21.3 million, of which $10.3 million occurred in the second quarter. As a result of the above, Snap-on continues to expect that third quarter sales and earnings will be down year over year.

Snap-on is aggressively managing the balance between investing and capturing strategic growth opportunities with the need for cost-reduction actions beyond those already implemented; the current economic uncertainty makes it extremely difficult to presently predict this balance as the company continually adjusts to the challenging business environment.

These are just the highlights. You can read the entire article at www.aftermarketnews.com

Highlights from Snap-on's 3rd Quarter Results

Here's the detail you won't find on the wire services:

Snap-on Announces Record Third Quarter 2008 Earnings
Diluted EPS of $0.94 increases 34.3% over $0.70 earned last year; Sales increase of 2.5%; Expects continued year-over-year earnings improvement for balance of 2008
Snap-on Incorporated (NYSE: SNA), a leading global innovator, manufacturer and marketer of tools, diagnostics, equipment, software and service solutions for professional users, today announced operating results for the third quarter of 2008.

"We are very encouraged by our third quarter results, especially given the current global economic challenges," said Nick Pinchuk, Snap-on's president and chief executive officer. "We continue to focus on fortifying our already strong business models, pursuing geographic and customer diversification, and driving our value creating processes, including innovation and rapid continuous improvement. These are the activities that have created the string of encouraging results over the last few years and we're confident they will serve us well going forward.
"The global economic challenges have made forecasting uncertain," said Pinchuk. "Snap-on, however, remains positive looking forward and believes that continued execution of our core strategies will support improved year-over-year earnings again in the fourth quarter. Finally, as we report these results, it's clear that the progress would not be possible without the dedication and support of our franchisees and associates. I thank them for their extraordinary contributions."

Highlights of Snap-on's third quarter 2008 operating results are as follows:

Net sales of $697.8 million increased $17.1 million, or 2.5%, over prior year, including $12.1 million from currency translation.
Gross profit improved to 44.7% of net sales in 2008 from 44.2% in 2007;
Operating expenses improved to 33.0% of net sales in 2008 from 34.4% in 2007.
Operating earnings of $86.4 million increased 19.3%, or $14.0 million, over prior year; currency translation contributed $0.3 million of the increase. As a percentage of revenues, operating earnings improved to 12.1% in 2008 from 10.4% in 2007. For the nine months ended September 27, 2008, operating earnings improved to 13.0% of revenues, as compared to 10.7% in the year-ago period.
Net earnings of $54.6 million increased 32.8% from $41.1 million in 2007; diluted earnings of $0.94 per share increased 34.3% from $0.70 per diluted share in 2007.
For the twelve month period ended September 2008, pretax return on invested capital was 22.0% as compared to 18.4% for the comparable 2007 period. Pretax return on invested capital is defined as earnings before interest and taxes divided by the quarter-end average of shareholders' equity and net debt.
Commercial & Industrial Group segment sales of $338.1 million were up $10.2 million, or 3.1%, from prior year.
Excluding $12.4 million of currency translation, sales declined $2.2 million year over year as continued growth in emerging markets, contributions from increased sales of power tools, higher sales of tools, kits and tool storage products to industrial customers, and continuing strong sales in our innovative, imaging aligner units were more than offset by lower sales of professional tools in Europe and by sales declines in other wheel service equipment worldwide.

Operating earnings of $40.7 million increased $8.0 million, or 24.5%, from prior year as contributions from higher pricing and savings from ongoing Rapid Continuous Improvement (RCI) initiatives were partially offset by the lower level of organic sales and commodity cost increases. As a percentage of sales, operating earnings in the quarter improved to 12.0%, as compared with 10.0% a year ago.

Snap-on Tools Group segment sales of $269.5 million increased $7.5 million, or 2.9%, from prior-year levels; currency translation contributed $0.4 million of the sales increase. Higher year-over-year sales in the company's international franchise operations were partially offset by a 0.3% decline in U.S. sales.

Operating earnings of $28.2 million were up $3.6 million from prior-year levels. Contributing to this increase were higher international sales, benefits from RCI initiatives and lower franchisee termination costs in the United States. These increases were partially offset by the impacts of a less favorable sales mix and $5.0 million of higher material and freight costs. As a percentage of sales, operating earnings in the quarter improved to 10.5%, as compared with 9.4% a year ago.
Diagnostics & Information Group segment sales of $155.1 million were up $3.1 million from prior-year levels primarily due to higher OEM program sales as a result of a new essential tool program in North America, increased sales of diagnostics products in Europe and higher sales of Mitchell1(TM) information products. These sales increases were partially offset by lower sales of diagnostics products in the United States and by lower sales at Snap-on Business Solutions, including expected lower sales from the planned exit of certain non-core product lines.
Operating earnings of $27.2 million were up $5.0 million from prior-year levels primarily due to benefits from RCI initiatives and contributions from the higher sales. As a percentage of sales, operating earnings in the quarter improved to 17.5%, as compared with 14.6% a year ago.
Financial Services operating income was $4.8 million on $18.0 million of revenue, as compared with $5.6 million of operating income on $15.8 million of revenue a year ago. Contributions from higher revenues in 2008, primarily as a result of lower market discount rates, were more than offset by higher year-over-year operating expenses, including $1.4 million of one-time, project-related costs.
Outlook
Snap-on intends to continue investing in its strategic growth initiatives aimed at expanding value provided to its traditional customers, penetrating new and adjacent segments, and extending its presence in the emerging markets of Asia/Pacific and Eastern Europe. Snap-on also expects to continue implementing its RCI and low-cost sourcing initiatives intended to provide higher levels of profitability.
Based on current expectations, Snap-on expects that its earnings for the balance of 2008 will continue to exceed 2007 levels. Additional detail about Snap-on is also available on the Snap-on Web site.

Overall, Snap-on has posted decent numbers for this tough U.S. economy. And it appears they plan to maintain current initiatives to continue their growth plans.

Snap-on Tools' Recent Show

As many of you know, a few years ago, Snap-on changed their tradition of holding their regional shows across the country into one big annual show in Las Vegas. Again, this year, they returned to Las Vegas. This year they held their show at the South Point Hotel, Casino and Spa in Las Vegas. The hotel was at the very end of the strip, but well worth the cab ride. Once you arrived, you didn't have to go anywhere else for food, entertainment, gambling and tool news!

As it turns out, this year's show ended up being very well attended. For most of the year, a lot of manufacturers have crossed their fingers at the approach of each show, asking themselves - "will the distributors show up? Will they buy anything? Did I make the right decision by spending the time/money to attend another tool show?" But - according to my sources, there was no need for concern. Once again, Snap-on held a fabulous show. It's been reported that more than 3,000 distributors attended. And, best of all, they were in a buying mood! Manufacturers were not disappointed.

Considering that ISN held their show just 5 weeks earlier, many manufacturers did not have anything "new" since then. However, they brought all their new 2008 products, and the Snap-on distributors LOVED it. No surprise - the hottest products appeared to be in the DIAGNOSTICS section. Diagnostics was always jammed with distributors, from the beginning of the show on Friday, til the show ended Sunday afternoon.

One manufacturer told me, based on his sales at the show, it was the best show he's attended this year. People were in a buying mood and his sales reflected this.

All in all, it was an excellent opportunity for Snap-on to showcase their new products, and share some of the successes of 2008 with their community of dealers and vendors. Perhaps this is an indication of our industry picking up again in the second half?

As announced in late July, Snap-on has been having a pretty good year, even though the U.S. economy has slowed. Their operating results for the second quarter of 2008 include a 7.6% increase in net sales over prior year (without their favorable currency exchange, their net sales are up 3.1%).

They attribute their success in the first half of '08 to the improvements they've made in operations and growth initiatives. According to Nick Pinchuk, Snap-on's president and CEO, "second quarter operating performance evidences continued achievements in our strategic
diversification and growth initiatives. Despite the continued macroeconomic challenges, the strength of our global and diverse customer base and the value created by our innovation and rapid continuous improvement processes combined to deliver significant sales and profit improvements.”

Additional highlights of Snap-on’s second quarter 2008 operating results are as follows:
• Operating earnings of $111.7 million increased 27.8%, or $24.3 million, over prior year, Operating earnings as a percent of revenues improved to 14.2% in 2008 from 12.0% in 2007.
• Net earnings from continuing operations of $66.9 million increased 26.7% from $52.8 million in
2007; diluted earnings of $1.15 per share increased 27.8% from $0.90 per diluted share in 2007.
Commercial & Industrial Group segment sales of $387.7 million were up $56.1 million, or 16.9%,
from prior year, including $25.0 million of currency translation. Excluding currency translation, sales growth was 9.4%, with strong contributions from Snap-on’s global industrial and power tools businesses.
Emerging markets continue to be important for growth, as well as increased sales of imaging alignment systems, and higher sales of professional tools in Europe - all contributed to the year-over-year sales increase.
Operating earnings of $49.3 million increased $16.8 million, or 51.7%, from prior year primarily due to the sales improvement, including higher sales of innovative new product, improved pricing and continued benefits from Rapid Continuous Improvement (RCI) and other cost reduction initiatives, which more than offset higher production and material costs. The operating earnings increase also reflects $5.0 million of lower restructuring costs and $1.5 million of currency translation. As a percentage of sales, operating earnings in the quarter improved to 12.7% as compared with 9.8% a year ago.

News from the AAPEX Show: Auto-Wares, Prime Automotive & Snap-on Tools

Last Week at AAPEX, held in Las Vegas: Fred Bunting Receives Art Fisher Award

AWDA presented the 2007 Art Fisher Memorial Scholarship Award to Fred A. Bunting in recognition of his passion for training and education. Bunting received this honor during AWDA’s general session, held last Sunday night in Las Vegas.

The Art Fisher Memorial Scholarship Award is presented annually to an aftermarket company or individual that demonstrates outstanding commitment to education and training, either within their own companies or throughout the industry. Given in memory of former AWDA chairman Art Fisher, the award grants substantial scholarships in the name of the award winner to two students enrolled in the automotive aftermarket management program at Northwood University.

Bunting is the founder and chairman of Auto-Wares Inc. Group of Companies headquartered in Grand Rapids, MI. Auto-Wares is a full-line, full-service, full-program distributor servicing more than 600 jobbers. The company employs more than 1,500 people who together operate 336 Auto Value/Bumper to Bumper stores and 630 Auto Value/Bumper to Bumper Certified Service Centers.

For many service professionals in the Michigan region, a high point of the year is the Auto-Wares Tech Expo. Auto-Wares holds two of these events annually in Milwaukee, WI, and Grand Rapids MI. The 10-year-old event is tailored exclusively to professional technicians in automotive, heavy duty and PBE specialties. Last year, more than 3,000 techs visited Tech Expo and attended more than 4,800 training classes.

The success of Tech Expo has garnered the attention of many others in the aftermarket industry. Bunting believes that the more training our industry provides to technicians, the better it is for everyone. He has freely offered the secrets of his success and, in 2006, even granted AAIA permission to duplicate, brand and distribute instructional DVDs that provide other aftermarket companies with the how-to’s for hosting their own training events.

“Without a doubt, this program goes above and beyond in the pursuit of excellence in training and education in the automotive aftermarket,” said Larry Pavey of Federated Auto Parts in presenting the award. “It is a great pleasure to honor Fred Bunting, the driving force behind this outstanding effort.”

On a separate note, Prime Automotive, based in Olive Branch, MS has been purchased by Marubeni, a Japanese company. Prime Automotive is a member of the Tools and Equipment Distributors Association (TEDA), and has been in business supplying parts stores and distributors since 1982.

Here is information from Marubeni's corporate website: Marubeni America Corporation, along with Marubeni Corporation and Marubeni Automotive (collectively "Marubeni"), have acquired the Olive Branch, Mississippi based Prime Automotive Warehouse (“Prime”) for an undisclosed amount. Prime, established in 1982, is an industry leader in the distribution of aftermarket auto parts, chemicals, and tools to its large reseller customer base. Prime mainly markets its products through a monthly catalog.

Marubeni recognized several growing trends in the US aftermarket, including the steady demand for parts and chemicals that keep older vehicles running. According to the Automotive Aftermarket Industry Association (AAIA), the automotive aftermarket market has grown from $138 billion in 1997 to over $204 billion in 2006.

The market for automotive aftermarket parts is competitive and highly fragmented. The transaction will allow Prime to combine its sourcing and mail order expertise with Marubeni’s domestic and international networks. As part of its growth strategy, Prime will consider acquisitions in its current industry as well as new markets that will allow it to further expand its product line.

Steve Friedman will continue as President of Prime and there will be no changes to operating management. Prime will be managed within Marubeni America Corporation's Transportation. Industrial Machinery, and IT business unit. This unit also manages Marubeni’s auto leasing operation, Advantage Funding, and dealership network, Drivepoint.


And how about this from Snap-on? They reported a higher net sales and income in 3rd quarter than expected. With an increase in net sales of 14.5% and an increase in net income of 31.4%! These figures bring their net sales to $680.7 million and net income $41.4 million. I'd say they're having a great year so far!

Sales from the company’s tools group increased $18.1 million,or 7.4 percent, to $262 million. This was primarily because of a 5.4-percent increase in North American franchise sales and strong sales from some of Snap-on’s international franchise operations, primarily the United Kingdom and Australia. Meanwhile, diagnostic and information group sales increased $25.1 million, or 19.8 percent, to $152 million due, in part, to the 2006 acquisition of Snap-on Business Solutions.

Check here later for more news on what's happening with the big tool guys!