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Snap-on (SNA) Q2 Earnings Miss Estimates, Organic Sales Decline
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Snap-on Inc. (SNA - Free Report) reported second-quarter 2024 results, wherein both the top and bottom lines missed the Zacks Consensus Estimate. While revenues declined year over year, earnings experienced an increase from the year-ago period.
Snap-on’s earnings of $4.91 per share came below the Zacks Consensus Estimate of $4.94. However, the figure improved from earnings of $4.89 per share reported in the year-ago quarter.
Net sales dipped 1% year over year to $1,179.4 million and fell short of the Zacks Consensus Estimate of $1,198 million. This decline was driven by a 1.1% reduction in organic sales and $5.7 million from unfavorable foreign currency translation, which was partially mitigated by $7.3 million from acquisition-related sales.
Snap-On Incorporated Price, Consensus and EPS Surprise
The gross profit of $597.3 million decreased 1.1% year over year, while the gross margin contracted 10 basis points (bps) to 50.6%.
The company’s operating earnings before financial services totaled $280.3 million, up 1.2% year over year. As a percentage of sales, operating earnings before financial services expanded 50 bps to 23.8% in the quarter. Financial Services operating earnings were $70.2 million in the quarter, up 4.9% year over year.
Consolidated operating earnings (including financial services) were $350.5 million, up 1.9% year over year. As a percentage of revenues (net sales plus financial services revenue), operating earnings expanded 60 bps year over year to 27.4%.
Segmental Details
Sales in the Commercial & Industrial Group gained 2.1% from the year-ago quarter to $372 million. The growth reflects a $4.3 million, or 1.2%, organic sales gain and $7.3 million in acquisition-related sales, offset by $3.8 million due to unfavorable foreign currency translation. The organic increase was driven by higher activity with customers in critical industries, though this was partially offset by declines in the segment’s power tool and European-based hand tool operations.
Snap-on Tools Group segment’s sales declined 7.9% year over year to $482 million. The dip was led by a 7.7% decline in organic sales decline and $0.8 million of unfavorable foreign currency translation. Organic sales declined on lower activity in the U.S. operations, somewhat negated by increased sales in the segment’s international operations.
Sales in Repair Systems & Information Group improved 0.6% year over year to $454.8 million, with organic sales growth of 1%. However, unfavorable foreign currency translation of $1.5 million hurt sales. The increase in organic sales can be attributed to higher activity with OEM dealerships, partly offset by lower sales of diagnostic and information products to independent repair shop owners and managers.
The Financial Services business’ revenues rose 7.1% year over year to $100.5 million in the quarter.
Other Financial Aspects
The company ended the second quarter of 2024 with cash and cash equivalents of $1.23 billion, long-term debt of $1.19 billion, and shareholders' equity of $5.29 billion before non-controlling interest of $22.6 million.
Looking Ahead
Snap-on's markets and operations have consistently exhibited resilience against the uncertainties of the current environment. In 2024, Snap-on anticipates making continuous progress along its strategic growth paths. The company plans to leverage its established capabilities in the automotive repair sector while also focusing on expanding its professional customer base.
This expansion is not limited to automotive repair but extends to adjacent markets, additional geographies, and other critical industries where the costs and penalties for failure are significant. As a result, capital expenditure for 2024 is projected to be $100-$110 million. The company expects an effective tax rate of 22-23% for 2024.
This current Zacks Rank #3 (Hold) company’s shares have gained 0.8% in the past three months compared with the industry's 7.7% growth.
Image Source: Zacks Investment Research
Stocks to Consider
We have highlighted three better-ranked stocks in the broader sector, namely, Hanesbrands (HBI - Free Report) , G-III Apparel Group (GIII - Free Report) and Guess (GES - Free Report) .
Hanesbrands engages in designing, manufacturing, sourcing and selling of apparel essentials for men, women and children in the United States and internationally. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Hanesbrands’ current financial-year earnings suggests a 666.7% surge from the year-earlier levels. It has a trailing four-quarter earnings surprise of 10.2%, on average.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. GIII sports a Zacks Rank #1 at present. GIII Apparel has a trailing four-quarter earnings surprise of 571.8%, on average.
The Zacks Consensus Estimate for GIII’s fiscal 2024 revenues indicates an increase of 3.3% from the year-ago period’s reported level.
Guess designs, markets, distributes and licenses casual apparel and accessories for men, women and children, per the American lifestyle and European fashion sensibilities. GES carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Guess’s current financial-year sales suggests growth of 11.7% from the year-ago reported figures. GES has a trailing four-quarter earnings surprise of 31%, on average.
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Snap-on (SNA) Q2 Earnings Miss Estimates, Organic Sales Decline
Snap-on Inc. (SNA - Free Report) reported second-quarter 2024 results, wherein both the top and bottom lines missed the Zacks Consensus Estimate. While revenues declined year over year, earnings experienced an increase from the year-ago period.
Snap-on’s earnings of $4.91 per share came below the Zacks Consensus Estimate of $4.94. However, the figure improved from earnings of $4.89 per share reported in the year-ago quarter.
Net sales dipped 1% year over year to $1,179.4 million and fell short of the Zacks Consensus Estimate of $1,198 million. This decline was driven by a 1.1% reduction in organic sales and $5.7 million from unfavorable foreign currency translation, which was partially mitigated by $7.3 million from acquisition-related sales.
Snap-On Incorporated Price, Consensus and EPS Surprise
Snap-On Incorporated price-consensus-eps-surprise-chart | Snap-On Incorporated Quote
Q2 Highlights
The gross profit of $597.3 million decreased 1.1% year over year, while the gross margin contracted 10 basis points (bps) to 50.6%.
The company’s operating earnings before financial services totaled $280.3 million, up 1.2% year over year. As a percentage of sales, operating earnings before financial services expanded 50 bps to 23.8% in the quarter. Financial Services operating earnings were $70.2 million in the quarter, up 4.9% year over year.
Consolidated operating earnings (including financial services) were $350.5 million, up 1.9% year over year. As a percentage of revenues (net sales plus financial services revenue), operating earnings expanded 60 bps year over year to 27.4%.
Segmental Details
Sales in the Commercial & Industrial Group gained 2.1% from the year-ago quarter to $372 million. The growth reflects a $4.3 million, or 1.2%, organic sales gain and $7.3 million in acquisition-related sales, offset by $3.8 million due to unfavorable foreign currency translation. The organic increase was driven by higher activity with customers in critical industries, though this was partially offset by declines in the segment’s power tool and European-based hand tool operations.
Snap-on Tools Group segment’s sales declined 7.9% year over year to $482 million. The dip was led by a 7.7% decline in organic sales decline and $0.8 million of unfavorable foreign currency translation. Organic sales declined on lower activity in the U.S. operations, somewhat negated by increased sales in the segment’s international operations.
Sales in Repair Systems & Information Group improved 0.6% year over year to $454.8 million, with organic sales growth of 1%. However, unfavorable foreign currency translation of $1.5 million hurt sales. The increase in organic sales can be attributed to higher activity with OEM dealerships, partly offset by lower sales of diagnostic and information products to independent repair shop owners and managers.
The Financial Services business’ revenues rose 7.1% year over year to $100.5 million in the quarter.
Other Financial Aspects
The company ended the second quarter of 2024 with cash and cash equivalents of $1.23 billion, long-term debt of $1.19 billion, and shareholders' equity of $5.29 billion before non-controlling interest of $22.6 million.
Looking Ahead
Snap-on's markets and operations have consistently exhibited resilience against the uncertainties of the current environment. In 2024, Snap-on anticipates making continuous progress along its strategic growth paths. The company plans to leverage its established capabilities in the automotive repair sector while also focusing on expanding its professional customer base.
This expansion is not limited to automotive repair but extends to adjacent markets, additional geographies, and other critical industries where the costs and penalties for failure are significant. As a result, capital expenditure for 2024 is projected to be $100-$110 million. The company expects an effective tax rate of 22-23% for 2024.
This current Zacks Rank #3 (Hold) company’s shares have gained 0.8% in the past three months compared with the industry's 7.7% growth.
Image Source: Zacks Investment Research
Stocks to Consider
We have highlighted three better-ranked stocks in the broader sector, namely, Hanesbrands (HBI - Free Report) , G-III Apparel Group (GIII - Free Report) and Guess (GES - Free Report) .
Hanesbrands engages in designing, manufacturing, sourcing and selling of apparel essentials for men, women and children in the United States and internationally. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Hanesbrands’ current financial-year earnings suggests a 666.7% surge from the year-earlier levels. It has a trailing four-quarter earnings surprise of 10.2%, on average.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. GIII sports a Zacks Rank #1 at present. GIII Apparel has a trailing four-quarter earnings surprise of 571.8%, on average.
The Zacks Consensus Estimate for GIII’s fiscal 2024 revenues indicates an increase of 3.3% from the year-ago period’s reported level.
Guess designs, markets, distributes and licenses casual apparel and accessories for men, women and children, per the American lifestyle and European fashion sensibilities. GES carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Guess’s current financial-year sales suggests growth of 11.7% from the year-ago reported figures. GES has a trailing four-quarter earnings surprise of 31%, on average.