Snap-on Incorporated · NYSE:SNA
Snap-on — Q3 2006 Earnings Presentation
26 slides from Snap-on's earnings presentation, Oct 23, 2006
Slide 1: Snap-on to Acquire ProQuest Business Solutions and Announces 2006 Third-quarter Results
Snap-on to Acquire ProQuest Business Solutions Accelerates Snap-on's Profitable Growth Strategy and Snap-on Announces 2006 Third-quarter Results October 23, 2006
Slide 2: Cautionary Statement
These slides should be read in conjunction with comments from a conference call held on October 23, 2006. Statements made during the October 23, 2006, conference call and/or information included in this presentation may contain statements, including earnings projections, that are forward-looking in
Slide 3: ProQuest Business Solutions Overview
ProQuest Business Solutions Overview Jack Michaels Chairman, President and CEO
Slide 4: Acquisition of ProQuest Business Solutions Compelling Strategically and Financially
Acquisition of ProQuest Business Solutions Compelling Strategically and Financially Fits with Snap-on's Diagnostic & Information Group strategy of providing integrated shop diagnostics and information solutions Undeterred focus on Commercial & Industrial initiatives and implementation of Snap-on Too
Slide 5: OEMs and Their Dealerships are Important Service Segments
OEMs and Their Dealerships are Important Service Segments OEMs require integrated solutions partners Vehicle Design, Manufacturing, Supply Chain, Sales, Parts and Service Dealership after-warranty repair strategies are being executed Parts and service are the most profitable businesses within OEM de
Slide 6: Automotive OEM Dealership Share of Service is Growing
Automotive OEM Dealership Share of Service is Growing In the U.S., dealerships are 27% of automotive service spending Outside the U.S., dealerships have an even larger share Dealership service growth is expected to exceed growth in global vehicle PARC Global vehicle PARC forecasted to grow 2.7% annu
Slide 7: Parts and Service Critical to Success of Dealerships and OEM Service Strategy
Parts and Service Critical to Success of Dealerships and OEM Service Strategy U.S. professional service parts market is $80 billion; growing in excess of 3.4% annually Parts and service of U.S. dealerships is 12% of sales but 58% of profits Efficiency and profitability significantly improved by elec
Slide 8: Strong Strategic Fit
Strong Strategic Fit Tom Ward President - Diagnostics & Information Group
Slide 9: Diagnostics & Information Group brands, growth drivers and competencies
Brands: Brands: Brands: Brands: Growth Drivers: Increasing complexity of vehicles with advanced electronics Worldwide markets producing more sophisticated vehicles New markets and applications - global opportunity Hardware to software solutions transition New products and technological advances Expa
Slide 10: ProQuest Business Solutions Today
ProQuest Business Solutions Today Parts and Service - "must-have" EPCs, related technical information, accessory catalogs and eCommerce solutions 15 Automotive OEMs, 33,000 Dealerships 40 Power Equipment OEMs, 75,000 Dealerships 13 Power Sports OEMs, 10,300 Dealerships Performance Measurement - coll
Slide 11: ProQuest Business Solutions Customer Relationships
ProQuest Business Solutions Customer Relationships* Parts and Service Automotive: Acura, Daimler-Chrysler, Ford, General Motors, Honda, Hyundai, Isuzu, Lexus, Mazda, Mercedes-Benz, Nissan, Saturn, Subaru, Suzuki, Toyota, Volvo Power Equipment/Sports: Alamo, Arctic Cat, BMW, BRP, Ducati, Harley-David
Slide 12: Automotive OEM Dealership Repair Process
Automotive OEM Dealership Repair Process Linking and integrating information, functions and products in the OEM repair shop Parts Information at the Center of the Repair Process Opportunity For Deeper Integration Across Processes Opportunity For Deeper Integration Across Processes
Slide 13: Financial Highlights
Financial Highlights Marty Ellen Senior Vice President and CFO
Slide 14: Transaction Overview
Transaction Overview Cash of approximately $480 million plus assumption of $19 million of debt Purchase Price Funding Approvals and Closing $180 million in cash $300 million from existing credit facilities at closing Expect to term fund $250 million of the credit facility shortly after closing Finan
Slide 15: Important Financial Considerations
Important Financial Considerations Accretive to earnings and cash flow in early 2007 Expect $5 - $10 million of growth spending in 2007 Debt to capital ratio of 34% at closing Free cash flow available for debt reduction estimated to be in excess of $100 million annually Balance sheet liquidity and f
Slide 16: Pro forma Financial Information (Unaudited)
Pro forma Financial Information (Unaudited) Pro forma data combines Snap-on and ProQuest Business Solutions. ProQuest Business Solutions' results adjusted to reflect results on a stand-alone basis from ProQuest Company. Excludes the effect of the DCS acquisition announced in September 2006. It is ex
Slide 17: Acquisition of ProQuest Business Solutions Compelling Strategically and Financially
Acquisition of ProQuest Business Solutions Compelling Strategically and Financially Fits with Snap-on's Diagnostic & Information Group strategy of providing integrated shop diagnostics and information solutions Undeterred focus on Commercial & Industrial initiatives and implementation of Snap-on Too
Slide 18: Quarterly Financial Review Third Quarter 2006
Quarterly Financial Review Third Quarter 2006
Slide 19: Consolidated Results - 3rd Qtr
Consolidated Results - 3rd Qtr Sales up $45.4 million (includes $8.8 million of currency translation); sales per employee up 2.5% to $206K Snap-on Tools sales essentially flat; International sales up 2.1% Higher sales in the OEM equipment solutions business, emerging market growth, increased sales o
Slide 20: Snap-on Tools Group - 3rd Qtr
($ in millions) 2006 2005 Change Segment sales Organic sales Currency translation $ 243.9 (2.5) 1.6 $ 244.8 (0.4)% (1.0)% 0.6 % Gross profit % of sales $ 107.2 44.0 % $ 109.1 44.6 % (1.7)% Operating expenses % of sales $ 91.5 37.6 % $ 89.0 36.4 % 2.8 % Operating earnings % of sales $ 15.7 6.4 % $ 20
Slide 21: Commercial & Industrial Group - 3rd Qtr
Sales increased $24.6 million or 9.4%; includes $6.1 million of favorable currency translation Growth in emerging markets Higher U.S. sales of power tools and tools for industrial applications, increased sales of under-car equipment Operating earnings up $5.5 million or 30.9% Increased sales and pri
Slide 22: Diagnostics & Information Group - 3rd Qtr
Sales up $31.3 million or 31.2% Sales increase driven by higher sales in the OEM equipment solutions business Increased sales of handheld diagnostics and information products Operating earnings up $4.7 million or 39.8% And more "Increased" to under "Sales" Increased sales; benefits from rapid contin
Slide 23: Financial Services - 3rd Qtr
($ in millions) 2006 2005 Change Segment revenues $ 11.3 $ 13.1 (13.7)% Operating earnings $ 3.0 $ 3.6 (16.7)% Originations $128.9 $130.6 (1.3)% Lower revenue and earnings Rising interest rates Lower yields on certain new financing programs Originations down 1.3% Lower lease and dealer finance origi
Slide 24: Balance Sheet - As of September 30, 2006
Total Debt of $215.8 million; Cash of $246.0 million Net debt position is $162.6 million lower than 3rd quarter 2005 Repaid $100 million of debt in 4th quarter of 2005 Inventories - $312.6 million Up $29.4 million from year end due to seasonal builds and $10.2 million of currency translation Down $1
Slide 25: Cash Flow
($ in millions) 3rd Quarter 3rd Quarter Year to date Year to date ($ in millions) 2006 2005 2006 2005 Net cash provided by operating activities Net cash due to: Net earnings Depreciation and amortization Changes in operating assets, liabilities and deferred income taxes $ 76.9 28.2 11.8 32.0 $ 65.6
Slide 26: Q & A Session
Q & A Session