Snap-On (NYSE: SNA) reported Q4 EPS of $2.69, $0.03 better than the analyst estimate of $2.66. Revenue for the quarter came in at $974.6 million versus the consensus estimate of $940.5 million.

• Net sales of $974.6 million in the quarter increased $84.8 million, or 9.5%, from 2016 levels, reflecting a $38.9 million, or 4.3%, organic sales gain, $29.7 million of acquisition-related sales and $16.2 million of favorable foreign currency translation.
• Operating earnings before financial services in the quarter of $157.7 million, or 16.2% of sales, included a pre-tax charge related to a judgment (a “legal charge”) of $30.9 million in a patent-related litigation matter that is being appealed, and compared to $176.1 million, or 19.8% of sales, last year. Excluding that legal charge, operating earnings before financial services, as adjusted, in the fourth quarter of 2017 were $188.6 million, or 19.4% of sales.
• Financial services revenue in the quarter of $79.9 million increased $5.7 million from 2016 levels; financial services operating earnings of $54.4 million increased $2.8 million from $51.6 million last year.
• Consolidated operating earnings in the quarter of $212.1 million, or 20.1% of revenues (net sales plus financial services revenue), compared to $227.7 million, or 23.6% of revenues, last year. Excluding the above legal charge, consolidated operating earnings, as adjusted, in the fourth quarter of 2017 were $243.0 million, or 23.0% of revenues.
• The fourth quarter effective income tax rate of 33.0% in 2017 was reduced by 120 basis points as a result of the above legal charge and increased by 360 basis points as a result of a $7.0 million charge related to the implementation of new tax legislation in the U.S. (“tax charge”). The tax charge includes an estimated transition tax on unremitted foreign earnings, partially offset by an estimated tax benefit related to the revaluation of deferred tax assets and liabilities. Excluding the above legal charge and tax charge, the effective tax rate, as adjusted, was 30.6%. The fourth quarter effective income tax rate was 30.8% in 2016.
• Net earnings in the fourth quarter of 2017 were $129.5 million, or $2.24 per diluted share, compared to net earnings of $146.3 million, or $2.47 per diluted share a year ago. Excluding the above legal charge and tax charge, net earnings, as adjusted, were $155.6 million in 2017, or $2.69 per diluted share.
• Full year net sales of $3,686.9 million increased $256.5 million, or 7.5%, from 2016 levels, reflecting a $115.0 million, or 3.4%, organic sales gain and $141.5 million of acquisition-related sales. Full year net earnings of $557.7 million, or $9.52 per diluted share, compared to net earnings of $546.4 million, or $9.20 per diluted share, last year. Excluding the third and fourth quarter legal charges and the tax charge, net earnings, as adjusted, were $593.1 million in 2017, or $10.12 per diluted share.

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