Monday, August 25, 2008

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.

No comments: