KENOSHA, Wis. — Snap-on has announced operating results for the third quarter of 2008.
Net sales of $697.8 million increased $17.1 million, or 2.5 percent, over prior year, including $12.1 million from currency translation.
Gross profit improved to 44.7 percent of net sales in 2008 from 44.2 percent in 2007; operating expenses improved to 33 percent of net sales in 2008 from 34.4 percent in 2007.
Operating earnings of $86.4 million increased 19.3 percent, or $14 million, over prior year; currency translation contributed $0.3 million of the increase. As a percentage of revenues, operating earnings improved to 12.1 percent in 2008 from 10.4 percent in 2007. For the nine months ended Sept. 27, operating earnings improved to 13 percent of revenues, as compared to 10.7 percent in the year-ago period.
Net earnings of $54.6 million increased 32.8 percent from $41.1 million in 2007; diluted earnings of 94 cents per share increased 34.3 percent from 70 cents per diluted share in 2007.
For the twelve month period ended Sept. 2008, pretax return on invested capital was 22 percent as compared to 18.4 percent 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.
“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.
Based on current expectations, Snap-on said it expects that its earnings for the balance of 2008 will continue to exceed 2007 levels. Snap-on incurred $8 million of restructuring costs in the first nine months of 2008 and expects full year 2008 restructuring costs to be in a range of $12 million to $14 million, down from its previous estimate of $13 million to $16 million. Snap-on anticipates that its full year effective income tax rate on earnings before equity earnings and minority interests will approximate 33.3 percent in 2008.
