Snap-on Profits, Revenues Surge
Wall Street investors send stock price to record high

By Deneen Smith
Kenosha News

Kenosha-based Snap-on Inc. said Thursday its fourth-quarter profit rose 39 percent, with sales revenue growing in all segments of the business.

The company earned $38 million, or 64 cents per share, compared with $27.4 million, or 47 cents per share, for the same quarter in 2005. Revenue rose 16 percent to $656 million from $563.4 million in the year-ago period.

The sales growth included $20.4 million from the late November acquisition of ProQuest Business Solutions.

Sales also increased by 12.1 percent in the Snap-on Tools Group, with fourth quarter sales of $261.6 million. The company believes the increased sales in its core tools business reflects progress in its efforts to improve its franchising system and order-fill rates.

Those changes helped boost sales by improving sales at existing franchise operations rather than increasing sales by growing the number of franchises.

"While there is still much work and opportunity ahead, we are encouraged by the progress made this year in executing our strategies to improve customer service, strengthen our brands, improve our global supply chain and lower costs," said Jack D. Michaels, Snap-on chairman, president and chief executive officer.

Spokesman Rick Secor said the company revamped its support system for its franchises in 2006, instituting a team approach to help the franchise owners who sell Snap-on Tools from trucks.

Secor said a four-person team in each territory now helps support franchises in that area, with each team including a business manager dedicated to helping each franchise owner with their business operation, and a sales development manager helping them boost sales.

"The business manager is really focused on planning or helping the franchisee with his business planning," Secor said.
In addition, the company improved delivery times to franchises and introduced "new product innovations," Secor said.

The results beat Wall Street predictions. Analysts polled by Thomson Financial had expect ed a profit of 51 cents per share on $610.7 million in revenue.

For the full year 2006, Snapon earned $100.1 million, or $1.69 per share, compared with $92.9 million, or $1.59 per share, for the same quarter in 2005. Revenue rose to $2.47 billion from $2.31 billion, up 7.1 percent from the previous year.

The company is expecting continued operating and earnings improvements in 2007. It is also anticipating restructuring costs of $26 million to $30 million, up from $22 million in 2006.

The news sent Snap-on shares to record highs. Shares closed at $50.88, up more than 5.5 percent.