Snorkel posted second quarter sales of $44.9 million, a 20-percent increase compared to the same period in 2016, with an operating profit, excluding depreciation, of $1.1 million according to a business update released by Tanfield, which owns 49 percent of Snorkel’s equity.
For the first six months of 2017, sales were $79.7 million, a 13-percent leap compared to the first six months of 2017. Operating profit for the first six months of the year are $1.5 million, compared to a $1.4 million loss in the first half of 2016.
Largely as a result of cost reductions, the gross margin for Snorkel in the first half of 2017 has improved 40 percent compared to the gross margin for the full year 2016.
Snorkel has continued to achieve improved market share in targeted regions, allowing the company to create a broader and more diverse customer base that helped it achieve stronger growth during the first half of the year. New customers have included some large rental companies that had not purchased Snorkel products for a number of years, and have been impressed with the company’s improved product range, manufacturing quality and enhanced customer services.
Snorkel targeted double digit growth in 2017 from its U.K. manufacturing facility, but because of the U.S. facility’s dependence on Ahern Rentals as its biggest customer, it was uncertain that there would be significant growth in the U.S. this year. Tanfield is confident Snorkel will continue to do well in the second half of 2017.
If Snorkel achieves an annualized trailing EBITDA of $25 million in any 12-month period by Sept. 30, 2018, Tanfield would request payment of the calculated realization of the preferred interest holding in Snorkel. If Snorkel doesn’t achieve that goal by that date, Tanfield’s ability to request payment ends. Tanfield would remain a 49 percent shareholder – as it has since selling the majority interest to Xtreme in October 2013 -- but the outcome would become uncertain and the return could be less than the current carrying value of $36.3 million.
