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Executives

Irwin Shur -

Nicholas T. Pinchuk - Chairman, Chief Executive Officer and President

Snap On Inc. (SNA) 2012 Annual Meeting of Shareholders April 26, 2012 11:00 AM ET

Irwin Shur

Good morning, and welcome to Snap-on's 2012 Annual Meeting of Shareholders. My name is Irwin Shur, and I am Vice President, General Counsel and Secretary of Snap-on Incorporated. I'll be acting as the parliamentarian for today's meeting. I would like to ask, at this time, if everyone could please turn off their cell phones. I've already done mine. Each of you should have received the order of business and the rules of order, and we would request that you abide by these rules. If anyone has not yet voted and wishes to cast their vote, our inspector of election, Mr. John Ruocco of Computershare, is outside at the table, and you can go over there and record your vote.

Attending today's meeting in person are the following board members, and I will ask them to please stand when I call their names. Karen Daniel, Division President and Chief Financial Officer of Black & Veatch Corporation; Roxanne Decyk, Retired Executive Vice President of Global Government Relations of Royal Dutch Shell plc; John Fiedler, Retired Chairman of the Board of BorgWarner Inc.; James Holden, Snap-on's Lead Director and Retired President and Chief Executive Officer of DaimlerChrysler Corporation; Nathan Jones, Retired President, Worldwide Commercial & Consumer Equipment Division of Deere & Company; Arthur Kelly, Managing Partner of KEL Enterprises L.P.; Henry Knueppel, Retired Chairman of the Board of Regal Beloit Corporation and Interim Chairman and Chief Executive Officer of Harsco Corporation; Edward Rensi, President and Chief Executive Officer of Tom & Eddie's and Retired President and CEO of McDonald's USA; Gregg Sherrill, Chairman and Chief Executive Officer of Tenneco Inc.; and Nick Pinchuk, Chairman of the Board, President and Chief Executive Officer of Snap-on.

Nick will present an update on the performance and progress of your company later in the meeting. Also here today are Mark Bruheini [ph] and Eric Coullue [ph], partners with our auditors, Deloitte & Touche. They will be available to answer questions following the meeting.

We have an affidavit that notice of this meeting was mailed as required, and it will be incorporated into the meeting minutes. I've been advised that we have a quorum with more than 89% of all shares outstanding represented at this meeting. With that, I call the 2012 Annual Meeting of Shareholders to order. 58,265,299 shares of common stock, each having one vote, are entitled to vote at this meeting. All voting figures are based upon the vote at 10 a.m. Central Time this morning. Voting results will be stated as a percentage of the stock represented at the meeting.

We have 4 items of official business on today's agenda. Our first item is the election of directors. The board has nominated the following candidates to serve until the 2015 annual meeting: Karen Daniel, Director since 2005; Nathan Jones, Director since 2008; and Henry Knueppel, Director since 2011. Each of the director nominees received votes in their favor of at least 95% of the shares represented and each has, therefore, been duly elected.

Our second item is the ratification of the Audit Committee selection of Deloitte & Touche LLP as the company's independent registered public accounting firm for 2012. 95% of the shares represented have voted in favor of this proposal and therefore, the Audit Committee's selection of Deloitte & Touche has been ratified.

The plurality of votes cast will be used to determine the voting results on the next 2 items. The third item is the advisory vote to approve the compensation of Snap-on Incorporated's named executive officers as disclosed in the proxy statement. As an advisory vote, this proposal is not binding on Snap-on. The resolution being presented for shareholder approval was set forth in the proxy statement. Since 96% of the votes cast have voted for the approval of the compensation of Snap-on's named executive officers, the non-binding resolution is hereby approved.

The last item of business is the advisory vote on a shareholder proposal regarding declassification of the Board of Directors. As an advisory vote, this proposal is also not binding on Snap-on. Mr. Dennis Atrosca [ph], as representative for the shareholder proponent of the proposal named in the proxy statement, has asked to present the proposal to shareholders, and will now do so in accordance with the rules of the Securities and Exchange Commission.

Unknown Attendee

Thank you. Proposal to repeal the classified board. Resolved that shareholders of Snap-on Incorporated urge the Board of Directors to take all necessary steps other than any steps that must be taken by shareholders to eliminate the classification of the Board of Directors and to require that all directors elected at or after the annual meeting in -- held in 2013, be elected on an annual basis. Implementation of this proposal should not prevent any director elected prior to the annual meeting held in 2013 from completing the term for which such director was elected.

This resolution was submitted by the Treasurer of the State of North Carolina Equity Investment Pool -- Fund Pooled Trust. The Treasurer of the State of North Carolina Equity Investment Fund Pooled Trust was represented and advised by the Harvard Law School Shareholders Rights Project. This resolution urges the Board of Directors to facilitate a declassification of the board. Such a change would enable shareholders to register their views on performance of all directors at each annual meeting. Having directors stand for elections annually makes directors more accountable to shareholders, and could thereby contribute to improving performance and increasing firm value.

Please vote for this proposal to make the directors more accountable to shareholders. Thank you.

Irwin Shur

84% of the votes cast have voted in favor of the shareholder proposal regarding declassification of the Board of Directors.

This completes our official business and therefore, the meeting is now adjourned.

Now we will have short video about Snap-on, followed by remarks from Nick Pinchuk. Let's watch.

[Presentation]

Nicholas T. Pinchuk

Ladies and gentlemen, men and women of Snap-on, my friends, it's my distinct good fortune to share, once again, the annual meeting and to give you a report on the state of our company. It is strong, and it has promising prospects for the future.

But before I do that, I can't help but reflect on that video. Snap-on, it was quite extraordinary, I think. Snap-on is a unique company that I have learned over my almost 10 years here, has meant so much and continues to mean so much to so many people. And I think that video captures it. Consider the words. It's played out millions of times over the decades. That first tool, gleaming. That first box, sturdy. Very descriptive and emotional, and I think, inspirational. And no outside ad agency could write those words because they are so infused with the emotion and the real essence of our company. And this video, like all the other videos we have shown at Snap-on, were created by the people of Snap-on who have poured their commitment and their emotion into it. And this year's video is no different.

And we happen to have here with us today, the writer, the director, the producer of the 2012 Snap-on video. He's been with us for more than 33 years, and you can see, every day of commitment and dedication in those words. Please recognize Mr. Rick Secor, 33 years with Snap-on.

It's a great facility. This is the biggest meeting room we've ever had on the Kenosha campus and has a lot of side benefits, but one of the benefits is it allowed us to hold the annual meeting here on the Kenosha campus for the first time in over 20 years. So for -- I know there are people in the audience, associates and retirees and community leaders that have supported us over the years and have journeyed to our annual meeting. So to all of you that have been with us for more than 20 years, I simply say, welcome home.

Now you may have gotten a view of this from the opening, and many of you know this, this is the place not far from here where we used to forge hot metal into tools that made work easier for people all over the world. Now we're going to forge ideas that will make work easier for people all over the world. That's why we have the name, IdeaForge. But to remember the heritage of this spot, this place, we have with us a man who, for 43 years, made tools out of hot metal in the storage department, and for a period, supervised that department. And over those 43 years made, I reckon, more than 12 million tools. He's with us here today, Harvey Spalding [ph] and his wife, Irene. Please stand up. Thank you for being with us again.

So we say, "Snap-on eases the way," and so it does. The world has advanced step-by-step over the years, and Snap-on has been part of this. And I'm going to speak about our company. But first, as in all of these events, I must show you a cautionary statement which basically says that whatever I say about the future might or might not happen. So you can read it here. That's enough. Okay, move on to the next.

Who we are. This is a banner, which is on almost every room in Snap-on. We know who we are. We are the people who make the most-valued productivity solutions in the world. We believe in safety, quality, passionate customer care, innovation and rapid continuous improvement. We believe in getting up every day and thinking how to do our jobs better. We value truth and integrity and respect and teamwork and listening. And we aspire. We have a vision of being the company of choice for all we touch.

And the people who -- there are many members of management, many people here who live this every day. Almost everyone here who works for Snap-on lives this every day. But I have here -- I'd like to introduce just some of the top operating management, to introduce you and show you -- introduce you, because they take some of the -- they take much of the credit for the results I'm going to share with you today. So I'll ask them to stand up, face the audience, and I'll ask you to hold your applause until the end. First, the President of the Tools Group, Mr. Tom Kassouf; then the President of the Repair Systems & Information Group, Mr. Tom Ward; then the President of SNA Europe, all the way from Paris, Mr. Jean-Pierre Levrey; and then -- I couldn't see Aldo there, Aldo Pagliari, our Chief Financial Officer; and then all the way from Singapore, as far as you can come probably, Mr. Benny Oh, the President of our Asia-Pacific Operation; and then the President of our Commercial Group, Mr. Anup Banerjee. Ladies and gentlemen, the operating management of Snap-on.

Thank you, all, my friends. And then, of course, we have a distinguished person here, too, for whom many of us remember and recognize his contribution. He is -- and as a -- is a person who I owe a special debt of gratitude. He's my predecessor as chief executive. He's my current counselor, and he's my ongoing friend. The man who gave us continuous -- complete and on time, Rapid Continuous Improvement, and had the idea of who we are and without whose leadership we would not stand in this hall today because I'm simply extending his ideas, Mr. Jack Duane Michaels.

And then, as long as we're talking about CEOs, let's just move back a little bit further to the -- a little bit further, much further, in fact, to the '70s, to the seventh CEO, Mr. Lutz. We have Susan Canyon-Lutz and Janet Lutz, his daughters here. Please stand up. And I spoke yesterday to the -- Bill Rayburn, the ninth CEO of Snap-on. He is in his 90s, and he was just weathering an 8-inch snowstorm in Canandaigua, New York, the largest snowstorm of the year. And he is hale and hearty, and he wishes you all well.

So if we're going to talk about -- if we're going to speak of Snap-on, I think it's worthwhile -- you can't understand the Snap-on story, you can't understand where we are, without speaking of the beginning. And here it is. The beginning, it's 1920. There are 7.5 million vehicles on the road. Today, there are 300 million vehicles on the road, so the auto industry was just starting. But the auto repair industry was really just starting. No one knew what it took to take -- to repair an automobile. No one knew what type of tools you needed. And in fact, there was almost no skill set that people could really identify to make it so.

Comes an engineer named Joe Johnson from Milwaukee. And he gets a brilliant idea. He takes handles of 5 different shapes, and he put it together with sockets of 10 different sizes, and he fastens them so they snap-on interchangeably. He called it "5 do the work of 50." It was a brilliant innovation, and it made work easier for technicians all over this country. It was the core of our technology.

But the founders, Joe Johnson and the founders, did something even more important then, more important to us. They called directly on mechanics. And when they would see the mechanics and sell the tools, they would lay them out on green felt like they were jewels. And indeed they were, implying that they were as rare as surgeon's knives and then further implying that the technician, the mechanic was as high a form of craftsman as a surgeon. And that started it all because what it said was, by owning those tools, the technician should have pride in what he does. This is at the core of what we do.

And unique among companies, we have a tie to the founder here with us today. First, I'd like -- we have ties to the founder. First, I'd like to introduce someone many of you know, 2 people many of you know, Greg and Kathy [ph] Johnson. Greg was a controller -- the controller of our corporation for many years, and his contributions are written across the numbers we had. Greg and Kathy [ph], please stand up.

And then, we have Mrs. Mary Johnson, a Snap-on treasure. A direct link to our founder who has graced us at every annual meeting I've been with, I can simply say that she is a treasure to us to all, an inspiration in the way she embraces life and reminds us of the great energy which started our corporation. Mrs. Johnson, please stand up.

And the tools were made, in those days, more repeatable and more reliable, and they're more repeatable and reliable today. Whether you're talking about wrenches or aligners or diagnostics, laptops for cars. And they -- because of the repeatability and reliability, they are used for the critical. And critical applications they have been applied to, consider this, Snap-on tools helped ready Lindbergh's flight on March 21, 1929 -- or May 21, 1929, across the Atlantic for the first time. They prepared Admiral Byrd's flight on November 28, 1929, to the South Pole. The Bahco tools, which is part of our business, was -- were the tools that helped free the miners in October 2010 in the Chilean mine disaster. And then Snap-on tools are regularly used by the U.S. Army when they need critical dependability when they operate in harm's way.

So Snap-on tools are dependable, and repeatable and reliable, and they are critical. And we, just as the video said, are celebrated for this. Everybody knows I think that Tony Stark and Bruce Wayne are devotees of Snap-on tools. Of course, I'm talking about Iron Man and Batman. These are 2 people who are billionaire savant tinkerers, who are superheroes by virtue of their technical capability and mechanical genius. And of course, they would use none other than Snap-on tools, and you can see it in the movies. And then the latest movie, Transformers of the Dark of the Moon, this is an actual picture, and this was on-screen for extended seconds in one of the repair facilities for the robots.

Now we didn't pay for any of this. We did not pay for any of this. Why? Because it's not believable. If technical things are being accomplished, if technical miracles are being accomplished, and they aren't using the best, and everybody knows that the best is Snap-on.

But you know, we're also celebrated in other ways, and this is my favorite. Katelyn Doss, 7 years old, granddaughter of Dan Doss, Director of EQS in Canada, knows how much her grandfather loves Snap-on tools. And so she wants to transfer her love to him and how she chooses it is to make a drawing of Snap-on tools. Cinemas to 7-year-olds celebrate Snap-on tools.

And how's this all working for us. Well, let's take a look at 2011. Sales are okay, encouraging. Last year -- 2 years ago or 2010, I guess, the sales were 2.6 -- $2,619,000,000. They moved to $2,854,000,000, a 9% increase. Profits moved. Opco, operating company profits moved from $317 million to $384 million. I guess this is 21.2%. The operating margin moved from 12.1% to 13.5%. This is 140 basis points. This is good stuff.

Now if you look at the trends, over the March of year. Here's the trends starting in 2005. Sales are what, $2.3 million, $2.5 million, $2.8 million, and the recession starts coming toward the end of 2008, $2.8 million again. Then it drips -- dips down to $2.4 million, back up to $2.6 million, and then last year, $2.9 million, rounding up from the $2.854 million, as we often try to do. And then you look at the profitability: 6.5%, 7.6%, 10.6%, 12.3%. And then it drops down to just under double-digits, 9.9%, then back to that 12.1%, and then 13.5% this year. A good trend even through recession.

We have something else that's happened to us all since 2005, that is the credit company came home. And look at the credit company numbers. We are bringing home a portfolio of loans, so we built them up and you can see these numbers. $398 million and then $733 million, and then $935 million last year, so building up. And the profitability is like this. We lost money in the first half -- in the second half of 2009. $9.1 million lost, then we went to a $14.4 million profit, then a $72.9 million profit last year. Good stuff for the finance company.

And we have with us today, a person who, more than anybody else, as much as anybody else, is responsible for this trend and responsible for us bringing the credit company home. He's our retiring director, Art Kelly, who was been with us for 34 years. Now the board honored him last night with a number of plaques and resolutions and statements, and so on. But we one more honor, and we have selected to deliver this honor Ms. Pam Acerbi, who was on the reception desk 34 years ago when Art entered for his first annual meeting, and has greeted him almost every time he has visited this building.

Now we are few people here, but we bear -- as appropriate for our annual meeting, we bear the proxies of the thousands around the world from places like California and New York and Paris and London and Frankfurt and Minsk and the Middle East and Singapore and Sydney and Tokyo and Buenos Aires, and Pam has a portfolio of letters from people around the world addressed to Art, thanking him for his service. She's going to present it to him now. Art?

Why don't -- I don't think we got -- right this way. Picture, we need a picture here. I want to get this moment.

And if you look at our earnings per share, they grew a little bit, 41.7% from just over $3 to $4.52. And the $4.52 doesn't include the $18 million we got for the settlement of CIT. That would -- so if you read it officially, you would see $4.71.

And there are other things besides the direct financials. The Board of Directors had the confidence of the future, so they declared a dividend again. You might remember that Snap-on has paid a dividend up, I think, 6.3%, $0.34. You might remember that Snap-on has paid a dividend every quarter since 1939. And we have never ever, ever, ever reduced it. This is probably the longest record of continuous, unreduced dividends of any public company in America.

We applied for another rating, a new rating agency, which we had never talked to before, Fitch. They've been there. We just didn't approach them. And they gave us an A- rating, which is a great rating for company of our size, and it brought our average up to A-. And then I think -- so I think in general, you can say that 2011 was an encouraging year, but I want everyone here to remember that you created the way.

All right. Let's talk about going forward. The world changes, and it's true, the world changes constantly, but Snap-on does ease the way in so many ways. And when we look forward, we see runways. Runways for improvement, and runways for growth. Let's talk about runways for improvement. Runways for improvement. You can find these things on -- these items -- in our beliefs on who we are. But basically they're a toolbox. We call it Snap-on value creation. The way we create value everyday: safety, quality, customer connection, innovation and Rapid Continuous Improvement.

Let's talk about safety. One of the things I'm proudest about, started by Jack and continued now, is that since 2004, Snap-on associates are 91% less likely to have an accident today than they were just in 2004. It's a great thing. It's great to feel that we're all safer.

Talking about quality. There's a lot of ways to measure quality, but one of the ways we do is to ask our customers. And we asked Frost & Sullivan to go out and ask auto mechanics in the United States, what is their preferred brand of tool? Well, for hand tools, 75% said Snap-on. The next highest rating was 8%. In tool storage, those numbers were 66% to 16%. For diagnostics -- or 66% to 12%. Diagnostics was 62% to 16%. 49% to 11% for power tools, and 44% to 27% for air tools. If these were football scores, they would be blowouts, all right? So -- and these numbers are bigger than ever before. Three of them are all-time records for us. So quality is improving.

Customer connection. One of the great things that Snap-on has is we are in more garages, in more workplaces for more hours and more days than any other company in the world. And you can see why this is so. We have 4,800 franchisees around the world. We have hundreds and maybe thousands of direct salesmen. We are in 600,000 garages in the western -- in the developed countries. We are in 2,500 community colleges. And this facility, Innovation Works, has had 12,000 visitors in 170 external events just since its founding.

So all this information feeds in to an innovation process. And the innovation process has been working. You can see it last year when MOTOR Magazine ranked the number of Snap-on tools among its top 20 tools, including the RFA 2000, an advanced balancer that uses lasers, among other things, to measure tire wear. The P10 Professional Tools & Equipment News, which cited our clear-coat tools storage boxes as one of the great products of the future. Undercar Digest, which is voted on by other people, which -- by the technicians, which cited our SOLUS Ultra, which has a reprogramming feature that was never before available and boots up in record time.

And then in Europe, the Red Dot Award, which is for design, which talked about the Bahco Ergo line, and recognized several of those for its special ergonomics. And then my personal barometer, which is last year we had almost 50 new products which sold over $1 million in their first year of being offered. It's a great thing.

Now we have with us one of the people responsible for this, Dan Eggert. Dan Eggert has been with us for almost 28 years. He started in 1984 as a quality engineer. In 1988, he was a design engineer. In 1992, he was a product engineer. In 1995, he became the manager of product research engineering. And in 1995 -- since 1995, he's been the manager of product engineering for the Tools Group. And just the other thing I forgot to tell you, he has 37 active patents for Snap-on, and he just got his last patent February 12 of this year. Please welcome a great engineer, Dan Eggert.

So safety, quality, customer connection, innovation, and then last but not least, the gift of Jack Michaels, Rapid Continuous Improvement. Getting up every day and thinking about how we can make our jobs better and done more efficiently. And we do. And it shows. Consider these numbers, 2007 and 2011. Sort of the same sales, $2.84 billion, $2.85 billion, but the returns, 10.6% and 13.5%. This is Rapid Continuous Improvement at its best.

And so we have pursued the runways for improvement tremendously. Let's go on. But we also have -- to our advantage, but we also have runways for growth. And they are 4 areas which we consider decisive. We kept investing in these areas even in the downturn: enhance the van network, expand with repair shop owners and managers, extend to critical industries and build in emerging markets.

Before we talk about the van network, let's think about the auto repair industry for a minute. What are the elements of it? How good is it? Where is it going? Well, the carpark [ph] in the world and particularly in the United States, is getting bigger every year, and it's getting older. In fact, the average car is now 10.6 years old, and it's gotten older every year since 1980. And almost 3/4 of them are over 7 years old. These are favorable trends for Snap-on.

Now some people ask me -- in fact, analysts always ask me about, "Well, what about hybrid vehicles and electronic cars and all these changes?" This is our friend. Because every time a car changes, people need new tools. So when we note -- when we look under the hood, and we see it more compact than it was the last year or more difficult, we like it. When we learn that the average car in 1995 had 50 engine codes, and we know that the average car today has 2,000 engine codes, we like it. When we know that a ride -- and the cars are getting lighter and people are more sensitive about ride, we like it. In fact, if President Obama were tomorrow to pass a law that said that every manufacturer had to have a fleet of 150 miles a gallon, I would personally kiss him, because it would be great business for us.

There's another fact, though -- there's another factor, which is independent garages. Independent garages are where we sell. If you think about it, an independent garage has to work on 30 badges. They need more tools, while the world is moving in that direction. In 2004, 68.1% of the world had -- repair dollars were in independent garages. Now it's 72.5% -- 72.4%.

So the auto repair industry is alive and well and getting better. And so is the Tools Group. Tools Group had a great first quarter, had a great year last year. The investments we made in enhancing the network is paying off. The health metrics have never been better. The sales have never been stronger. The financial health of our dealers have never been stronger. The terminations have never been lower. Our franchisees have never been more optimistic.

And in fact, it's been reflected in a number of things. The Franchise Business View rated us very -- Franchise Direct rated us very highly. Franchise Business Review moved us up 8 positions to the 20s. And then Forbes Magazine rated us as the #1 franchise in the world for the buck. So it said -- Forbes Magazine said Snap-on is a great proposition.

And this all has to do with our enhancing the van network. It's worked very well. And it's the van network. It has been at the core of our business, but Snap-on can be more. Our tradition is like this: we made wrenches, some right here. We sold them through vans to auto mechanics, and we did it better than anybody else.

And I just have a -- we just have one other guest to point out. A person whose father was hired by Joe Johnson in 1921, and who worked 43 years, most of the time in Canada, and whose mother met that father here at Snap-on. They both moved to Canada, and they had a family. And the family is here, Joe Sharon [ph] and Rosemary Sharon-Marks [ph], and Joe's wife Karen [ph]. So please stand up. Please stand up. So Rosemary Sharon-Means [ph], I'm afraid. But anyway, we love to have the link to our history. And they have been long supporters of Snap-on.

Now that was our tradition. But you know, that sort of the tools with -- Snap-on can be so much more. It can be so much more, and we are becoming so much more. And we're becoming so much more because we think of ourselves not as the company that makes wrenches sold just through vans to the mechanics, but actually, as the company that makes work easier for any professional, as long as they are performing critical tasks. That is where repeatability and reliability of that task means that the cost of failure will be so high, that repeatability and reliability is so necessary, that they're willing to pay for the best. They're willing to pay for Snap-on. And that extends the group of people we want to -- we can sell to, that we can serve, that we can help.

The first piece of this is expanding to garage owners -- to shop owners and the managers, repair shop owners and managers. We called on shops for years, but we didn't focus on these managers. Our share is much lower with this particular group of business, and that's what the Repair Systems & Information Group does for a living. They focus on this group. We have proprietary technology and the knowledge of how the shop runs and how the car should be repaired. We have better technology. We have a technology advantage and we are in the garage for more time. That's an opportunity for us, and Repair Systems & Information is pursuing that. And if you looked at the first quarter results, you see that they made an all-time high in their profitability.

And then we can extend to critical industries. What that means is extend to places that aren't necessarily -- aren't auto repair, but are other industries where the cost of failure are high. Aerospace, and oil and gas, and wind and government and power generation, and many others. And the Commercial Group and the Industrial Group grew at double digits last year and grew up double digits in the first quarter. And they are extending in that direction.

And then finally, building in emerging markets. Everybody knows about emerging markets, but I'll tell you our story, is that they're going to sell -- many people in the audience may not know this. They're going to sell 25% more new cars in China this year than they will sell in the United States. 25% more. So if you're making -- if you're Ford Motor Company, your biggest market in the world is China. It should be.

But you know, there are 300 million vehicles, as I said, on the road in the North America, and they're old. Their average -- many of them are -- 45% or more are 10 years old. So many and old are the numbers which create the million technicians and the 300,000 garages in the United States that are necessary. But in China, despite the fact they're only selling -- they're selling 25% more new cars, all the cars -- there's only 50 million to 60 million cars on the road, and they're all new. So repair is just starting. The wave is coming and we are building to take advantage of it.

In 2002, we had 2 losses in 10 people in Asia outside of Japan. Now, under Benny Oh's leadership, we have almost 1,500 people. We have 31 locations. We have 4 factories. So we are building the distribution, 31 locations. We are building the manufacturing facilities, 4 factories. And we're building the product line to sell to those people. We just opened -- the board dedicated in November the -- a new -- Kunshan -- Snap-on China Research and Engineering Center in Kunshan, just to build -- to take advantage of that wave that's for sure going to come.

Runway for growth, enhance the van network, expand with shop owners and managers, extend the critical initiation and build in emerging markets. So that's where we're going in the future. Runway for improvement and runway for growth. How is it going, you might ask. Well, let's look at 2012 results. First quarter of 2011 was $694 million. First quarter last -- this year is $735 million, a 7% organic growth increase. It was among the best reported in the first quarter. And then if you look at the other pieces of information in the first quarter, I ask you just to look -- focus on the earnings per share, $1.21 versus $0.96. This is a nice increase.

So that's the story. The Snap-on company is strong. Our brand and our physical position is strong. 2011 was an encouraging year. When we look forward, we see clear runways. Runways for improvement around safety, quality, customer connection, innovation and Rapid Continuous Improvement, and runways for growth around the areas I said which are all decisive. And the first quarter results seems to prove it. That's my message.

So now I'll take some questions. Do we have any questions? Okay, sir. There's a microphone right here.

Question-and-Answer Session

Unknown Attendee

With all the activities that's been going on with the Internet and all, do you see our dealer van diminishing in the future?

Nicholas T. Pinchuk

We ask ourselves this all the time. We ask ourselves, are we sitting on the milkman? The milkman -- we used to all have -- we used to all get milk, right, by the milkman? Well, I used to say that. Now when I look around the audience, perhaps there are people who don't remember the milkman, anyway. I want to assure you that nobody in these first rows here, though. But anyway, look, I don't think so. And we test it 2 ways, one is empirically. We measure the percentage of technician-buy that is done through the vans. And it has been rock solid for more than 1 decade. But the numbers are the same every year. The technicians are buying the same amount of their purchases through the mobile van. So empirically, the quantitative thing says -- the quantitative data says, no. And when we think of it logically. What does a van do? Well, a van is a rolling retail shop that runs up to the garage and allows the technician to take not so much time off to run out, look at the garage and touch and feel. Internet can't do that. That's one. Two, we guarantee our tools for life. So if there's a problem, a screwdriver breaks or something, he can bring it on the van. He doesn't have to go to a shop or mail it in. He takes care of that. And 3, we offer credit, and the only people who'll offer credit to technicians are those people who know them up-close and personal. So the vans, by logic, add actual value. I don't see them going away. Other questions? In fact, I see them getting stronger, to tell you the truth. The van business in the first quarter in the United States grew by 15%. This is an astronomical number, actually. Okay, any other questions? Yes?

Unknown Attendee

My wife is not here today. May I ask a question?

Nicholas T. Pinchuk

I noticed you didn't ask last year. Is that why? That was a shock. I lost a lot of money when you didn't ask a question last year.

Unknown Attendee

You know I can't resist this one. You mentioned President Obama? Okay, being an election year and so he was basically stopping through here, and my understanding, I think he wanted to ask you a question like the following: [indiscernible], only new jobs that you create in America [indiscernible]. How would you handle that?

Nicholas T. Pinchuk

Well, in America, our headcount -- the number of people we employ in America grew by 4.5% last year. So that's -- I don't have the exact -- and I can't translate that in the exact number. But that's a nice number of jobs. We -- sadly, we reduced through attrition and other ways during the downturn. It's never pleasant, and sometimes you feel as though it's management's responsibility for that. But one of the great things about this, we're able to add most of those jobs back -- some of those jobs back. Not in the same proportion because -- productivity goes on. But we have added some of those jobs back. And so I anticipate that we will continue to do that because I think the business in the United States is robust. And one of the things you have to remember on Snap-on is, is that we are going to be big in China. Book it. We have, oh, a significant position in Europe, although Europe is troubled now. But 80% of what we sell off the vans are made in America. And how are we able to do this? The reason is Snap-on uses a formula which I believe is the future of American manufacturing. That is we use proximity, flexibility and breadth of product line that allows us to satisfy the customer, and it's easier to satisfy the customer through proximity. We use proximity to the world's greatest market to our advantage. It's harder to deliver such a wide range of product at such speed, 10,000 miles and 12x on the way. So I'm very bullish on American employment. Okay. And other questions?

Okay. Well, let me just conclude by this. Well, look, let me just summarize. The Snap-on -- our business is strong. It is strong. You can see it in the numbers. You can see it when you walk around and talk to people. You can see it when you speak to people on the street. 2011 was encouraging. It was an encouraging year. You can see it in the numbers. You can see it in the physical advancement. And we do have runways for growth and runways for improvement.

Well, I'm very optimistic. I'm very encouraged by the present, and I'm very optimistic for the future. But I know that in this audience, there's a number of retirees, so I can't leave this podium without saying this: We are grateful for the company you left us. You built an extraordinary company. And we the contemporary associates of Snap-on know, to the extent we reach higher, we stand on your shoulders. You have our gratitude for this. And I can tell you that as current-day associates, and I think I speak for all of them, you can count on this. We will get up every day and extend your -- and try to continue your legacy. We will get up everyday and make sure that first tool stays gleaming, make sure that first box stays sturdy, make sure this great company stays strong for the days and indeed, all the decades ahead.

Now everyone here -- or many people here traveled. Not everyone here is from Kenosha, and I know you traveled here. I ask you to do me one favor. When you travel home, please be safe. All of you are very important to us. And now one final point, is that I do think -- I do feel very fortunate to be able to chair this annual meeting once again, but I know that all that I've talked -- spoken of here today, would not have been possible without the people in this room, without the associates. We say in the video, "We are Snap-on," and you create the way, and you have done that. You have done just that. So for your dedication, for your energy, for your commitment and for your support, I thank you.

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