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Snap-On Inc. (NYSE:SNA) reported earnings from continuing operations of 63 cents per share for the first quarter of 2010, exceeding the Zacks Consensus Estimate of 50 cents.

Revenues of $621.6 million increased $49.0 million, or 8.6%, from 2009 levels. Excluding $24.4 million of foreign currency translation, organic sales increased 4.1%. Gross margin improved to 46.3% of sales, from 45.2% in the year-ago period.

Segment Results

Commercial & Industrial Group segment revenues of $297.5 million in the first quarter increased $37.7 million, or 14.5%, from 2009 levels. This reflected continued growth in emerging markets, with higher volumes of equipment and increased sales to industrial customers.

Snap-on Tools Group segment sales of $264.0 million in the quarter increased $21.6 million, or 8.9%, from 2009 levels. Excluding $10.7 million of foreign currency translation, organic sales increased 4.3%.

Diagnostics & Information Group segment sales of $135.1 million in the quarter increased $2.6 million, or 2.0%, from 2009 levels. Excluding $2.0 million of foreign currency translation, organic sales increased slightly.

Financial Services revenue of $9.7 million in the quarter declined $10.3 million from first quarter 2009 levels, but improved sequentially from $6.7 million in the fourth quarter of prior year.

Outlook

Snap-on recorded $3.2 million in restructuring costs during the first quarter of 2010 and continues to expect full-year 2010 restructuring costs of approximately $18 million to $22 million. The company continues to anticipate capital expenditures in 2010 to be $55 million to $60 million, of which $5.7 million was incurred in the first quarter.

Over the past few years, management has focused on delivering a more predictable and consistent financial performance. To this end, management implemented the ‘Driven to Deliver’ strategy in 2001, which resulted in an increased focus on customer relationships and business processes. In addition, the company has invested in new products and increased brand awareness.

In early 2005, management introduced the Rapid Continuous Improvement (NYSE:RCI) process, which is designed to improve organizational effectiveness and lower costs, including working capital requirements. As a result, asset utilization has improved by rationalizing production through plant closures, and working capital has been used more effectively.

Headquartered in Kenosha, Wisconsin, Snap-on is a global provider of professional tools, equipment, and related solutions for technicians, vehicle service centers, original equipment manufacturers (OEMs), and other industrial users.

We currently have a Neutral recommendation on Snap-on.

Source: Snap-On Exceeds Expectations