Snap-On Shares Fall Despite Q3 EPS Beat

Snap-on Inc SNA reported third-quarter sales growth of 10.2% year-over-year to $1.04 billion, and an increase of 7% on an organic basis, beating the consensus of $1.01 billion.
Sales by segments: Commercial & Industrial $351.4 million (+13.9% Y/Y); Snap-on Tools $471.4 million (+4.8% Y/Y); Repair Systems & Information $364.4 million (+14.8% Y/Y) and Financial Services $87.3 million (+1.8% Y/Y)
EPS improved to $3.57 compared to $3.28 in 3Q20, beating the consensus of $3.36.
The gross margin expanded by 35 bps to 50.2%. The operating income increased by 8.2%Y/Y to $271.9 million, and the margin contracted by 47 bps to 26.2%.
Operating earnings before financial services for the quarter of $201.3 million and the margin was 19.4%, down by 30 bps.
Snap-on generated cash from operating activities year-to-date of $743.9 million, compared to $691 million a year ago. It held cash and cash equivalents of $735.2 million as of October 2, 2021.
Outlook: Snap-on anticipates that capital expenditures in 2021 of ~$90 million, of which $53.8 million was incurred in the first nine months of the year. It sees an effective income tax rate of 23% - 24%.
Snap-on said it continues to respond to the global macroeconomic challenges through its Rapid Continuous Improvement process and other cost reduction initiatives.
Price Action: SNA shares are trading lower by 5.71% at $215 on the last check Thursday.

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