Snap-on Incorporated (NYSE:SNA) Q4 2014 Earnings Conference Call - Final Transcript

Feb 05, 2015 • 10:00 am ET


Snap-on Incorporated (NYSE:SNA) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Snap-on Incorporated Fourth Quarter and Full Year Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Leslie Kratcoski. Please go ahead.

Leslie Kratcoski

Thanks, Hannah, and good morning, everyone. Thanks for joining us today to review Snap-on's fourth quarter and full year financial results, which are detailed in our press release issued earlier this morning. We have on the call today Nick Pinchuk, Snap-on's Chief Executive Officer; and Aldo Pagliari, Snap-on's Chief Financial Officer.

Nick will kick off our call this morning with his perspective on our performance. Aldo will then provide a more detailed review of our financial results. After Nick provides some closing thoughts, we'll take your questions. As usual, we've provided slides to supplement our discussion. You can find a copy of these slides on our website next to the audio icon for this call. These slides will be archived on our website along with the transcript. (Forward-Looking Cautionary Statements).

With that said, I'll now turn the call over to Nick Pinchuk. Nick?

Nick Pinchuk

Thanks, Leslie. Good morning, everybody. I'll start with the highlights of our fourth quarter and our year. I'll give you my perspective on the results, on the markets and on the progress we've made. Then, Aldo will move into a more detailed review of the financials. The results of our fourth quarter were encouraging with sales increases and profit gains across our businesses, continuing our positive trend. We had opportunities, and we had headwinds. We took advantage of those opportunities, and we overcame the headwinds.

The result was organic sales growth of 9.8%. If we include $5.7 million contribution from Pro-Cut and $21.5 million of unfavorable foreign currency translation, overall sales in the quarter were $857.4 million, a rise of 7.5%. Our EPS was $1.97, up 23.1% from the $1.60 in 2013. And that rise reflects an OpCo operating margin of 16.9%, an increase of 140 basis points.

Financial service earnings of $42.2 million in the quarter were also up significantly. And the consolidated operating margin, including both Financial Services and OpCo, reached 20.4%, an improvement of 190 basis points compared to the 18.5% of last year. Looking at our markets, the automotive repair-related segments continue to be favorable, driven of course by expanding and aging car parts and year-after-year technology changes; all driving demand for our product. The Tools Group and the Repair Systems & Information, or the RS&I Group took advantage with volume growth by our van network and gains in OEM dealerships in independent repair shops confirming the progress.

But we also had opportunities rooted in our expanding capabilities and product lineup for the critical industries and in growing physical strength in emerging markets, areas within the Commercial & Industrial, or C&I Group, arenas that were challenged by a variety of headwinds, fluctuating currencies and macroeconomic turbulence in places like Eastern Europe, Japan, Indonesia and even the core of Western Europe.

Despite those challenges, C&I results were