23.05.2019

Snorkel sales on the rise

Snorkel has reported a strong first quarter in terms of sales, while posting an increased loss.

Total sales for the quarter were up 16 percent to $51.6 million, although gross margins slipped from 12.4 percent to 11.4 percent - possibly due to exchange rates and product mix. However, the company would have moved back into the black at the operating level had it not increased its sales and general administration costs by 25 percent. This resulted in a pre-tax loss of $1.6 million, compared with a loss in the same quarter last year of $1.3 million.

The results were revealed in an update from previous owner Tanfield which retains a 49 percent stake in the business, the value of which it wrote down last year by almost 50 percent to £19.1 million.

See Snorkel goes to Ahern

Vertikal Comment

As we have reported in the past there is little incentive for Snorkel owner Don Ahern to report a profit at this stage of the game, given that he has an option on the Tanfield shares that pays out according to a profit and cash flow level being achieved within five years of the deal being completed (it closed in October 2013) which has now been reached. Much better to invest heavily in the brand and developing the product range.

There was never much chance that Tanfield would receive any significant pay out for its stake in Snorkel. At the time the company could have sold it to one of the major aerial lift manufacturers who would simply have cherry picked any interesting products and dealers etc and shut it down to eliminate a competitor.

However Tanfield management believed that they might have had a better long term pay out from Ahern, and given that they had initially valued the 49 percent stake at $122 million ,it looked a lot better than the other offers which would have highlighted how the company managed to turn a $150 million+ investment into almost nothing at a time when the aerial lift market was doing quite well.

Negotiations are ongoing but with all of the Tanfield senior managers at the time long gone, it is an uphill task for the current managing director to realise anything out of a deal he played no part in. As to Snorkel's results, this is a very good start and it has some interesting new products to release this year. Revenues this year could easily exceed $250 million.