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

NACAT Conference - 2009

Last week, Tomorrow's Technician editor, Ed Sunkin, and I drove down to Charlotte, NC for the 2009 NACAT Conference. This year it was held at the Central Piedmont Community College. The North American Council of Automotive Teachers meets annually in a different city each year. It is a week-long conference filled with day-long seminars and training. Despite the economy, this year's conference had a record attendance level. We went for the trade show portion.

The purple truck below belongs to Dan Perrin's wife. Dan is the NACAT Executive Manager. He tells us his wife Lynda lets him drive it for her because she "likes the attention it gets and would rather wave back than have to watch the road."
Northwood University had a booth. Matco Tools had a booth. They have a program to reach automotive students while at school.

Hunter was there.

Chicago Pneumatic brought this beauty.

Chicago Pneumatic also brought out their beautiful people and beautiful tools.

Delmar was there.

Snap-on had a fun time with their booth. Play darts and win a cap! The instructors liked it.

We highlighted the School of the Year program at our booth, showcasing this year's winning entry.

Gates Rubber.

ISN Show - The Grand Finale

Mechanics Time Savers had a colorful booth.

Some people think Rich Evans is a little stiff and one-dimensional.

But he was everywhere. Here he is at the Chicago Pneumatic booth. The theme was tropical and Rich was hot!

Chicago Pneumatic got in on the giveaway action. One lucky distributor would be leaving Orlando with a 2009 Dodge Challenger.

There's Rich again. This time he's on tv.

Rich insisted on taking his picture with me. I autographed his t-shirt as well.Several of the Chicago Pneumatic employees dressed for the tropical theme of their booth. Did this guy go too far? You be the judge. (Hey, if it sells more tools.......)

Just one of the many new products coming from Chicago Pneumatic.

One young and happy fan of Irwin Tools. She like it so much, she kept trying to eat the display.

It was always very busy in the Irwin booth.

Extreme Tools featured their toolboxes.

And that concludes the coverage (in photos) of the ISN show. Look for commentary next week! (just kidding.)

At ISN, the Show must go on

Part IV - and seriously, after this I can only do one more blog on the show. I mean - the show took place over two days and this blog is now running into day 4.... Plus, with the holiday coming up, I need to wrap this up and move on. (the holiday being Independence Day, not Canada Day - no offense to my Canadian readers, but we don't get Canada Day off in Ohio.)

This is the "official" photo of the 2010 Camaro. See below for the ISN Show Camaro that Ingersoll Rand gave away to one lucky winner.



So here is a new lift from Challenger/Quality Lifts, though for the show it was private-branded "Mountain". This is a nice little 4-post vehicle storage/lift. It's big enough to hold a pick-up truck on the top and still have room for a car or truck below. Price point was nice for the shadetree mechanic.

Ingersoll Rand had a very nice display of new products.

The Camaro they were giving away was awesome! Looked great in black! Not even available at most dealerships yet.

Grey Pneumatic had a very large booth, filled with specialty sockets of all sizes.

GearWrench was busy and full of order-writing customers both days. They had a large booth and it was filled end-to-end with cool GearWrench tools.

DeWalt was a first-time exhibitor. They had great deals on some products and were pretty busy everytime I walked by their booth. This shot was taken prior to the show opening.

SPX had a Porsche Boxster in their booth, but honestly, that was not the draw for the customers. Their nuclear show specials and great products brought people in.

Special thank you to Chad Myers for the use of your photos.

A Break from the ISN Show Updates...

This morning I checked the recent traffic on my blog. It tends to go up when I write more. Not too difficult to understand. And readers numbers have been steadily climbing since Sunday. I like to see where my readers are from, and the number one and number two supporters are the U.S. and then Canada. But for the first time ever, Canada has been booted from the number two spot of providing most of my readers.

I narrowed my timeframe to the past three days and asked Google Analytics where my readers originated. Number one was the United States. Number two was 14 visits (over 3 days) from a town in Brazil called Pelotas. Now, I don't know anyone in Pelotas (that I know of). I don't know anyone in Brazil. And I don't speak Spanish or Portugese. But I am darn glad to have my Brazilian readers! Thanks!

In the U.S., most of my readers come from California, Ohio, and Florida. But there is one mystery to me. I have had a regular reader from Miamisburg, OH. Again, don't know anyone there (or maybe I do?). Luckily though I do speak the language, so Mr. or Ms. Miamisburg, drop me a comment and let me know what you think about the blog!