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Snap-on

Snap-onSNAEarnings & Financial Report

NYSE · Industrials · Industrial Machinery & Supplies & Components

Snap-on Incorporated is an American designer, manufacturer, and marketer of high-end tools and equipment for professional use in the transportation industry, including the automotive, heavy duty, equipment, marine, aviation, and railroad industries. Headquartered in Kenosha, Wisconsin, since 1930, Snap-on also distributes lower-end tools under the brand name Blue-Point. Their primary competitors include Matco, Mac Tools, and Cornwell Tools.

What changed in Snap-on's 10-K — 2023 vs 2024

Top changes in Snap-on's 2024 10-K

304 paragraphs added · 312 removed · 269 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

51 edited+4 added−7 removed60 unchanged
Company Direct Sales A significant proportion of shop equipment sales in North America under the John Bean, Hofmann, Blackhawk, Car-O-Liner, Challenger and Pro-Cut brands, diagnostic products under the Snap-on brand, and information and shop management products under the Mitchell1 brand are made by direct and independent sales forces that have responsibility for national and other accounts.
Company Direct Sales A significant proportion of shop equipment sales in North America under the Blackhawk, Car-O-Liner, Challenger, Hofmann, John Bean and Pro-Cut brands, diagnostic products under the Snap-on brand, and information and shop management products under the Mitchell1 brand are made by direct and independent sales forces that have responsibility for national and other accounts.
Some of the major trade names and trademarks and the products and services with which they are associated include the following: Names Products and Services Snap-on Hand tools, power tools, tool storage products (including tool control software and hardware), diagnostics, certain equipment and related accessories, mobile tool stores, websites, electronic parts catalogs, warranty analytics solutions, business management systems and services, OEM specialty tools and equipment development and distribution, and OEM facilitation services ATI Aircraft hand tools and machine tools AutoCrib Asset and tool control systems autoVHC Vehicle inspection and training services BAHCO Saw blades, cutting tools, pruning tools, hand tools, power tools and tool storage, including tool control systems Blackhawk Collision repair equipment Blue-Point Hand tools, power tools, tool storage, diagnostics, certain equipment and related accessories Car-O-Liner Collision repair equipment, and information and truck alignment systems Cartec Safety testing, brake testers, test lane equipment, dynamometers, suspension testers, emission testers and other equipment CDI Torque tools Challenger Vehicle lifts Cognitran OEM SaaS products Dealer-FX Service operation solutions and OEM SaaS systems Ecotechnics Vehicle air conditioning service equipment Fastorq Hydraulic torque and tensioning products Fish and Hook Saw blades, cutting tools, pruning tools, hand tools, power tools and tool storage Hofmann Wheel balancers, vehicle lifts, tire changers, wheel aligners, brake testers and test lane equipment Irimo Saw blades, cutting tools, hand tools, power tools and tool storage John Bean Wheel balancers, vehicle lifts, tire changers, wheel aligners, brake testers and test lane equipment Josam Heavy duty alignment and collision repair solutions Lindström Hand tools Mitchell1 Repair and service information, shop management systems and business services Nexiq Diagnostic tools, information and program distributions for fleet and heavy duty equipment Norbar Torque tools Power Hawk Rescue tools and related equipment for military, government, fire and rescue Pro-Cut Brake service equipment and accessories Sandflex Hacksaw blades, bandsaws, saw blades, hole saws and reciprocating saw blades ShopKey Repair and service information, shop management systems and business services Sioux Power tools Sturtevant Richmont Torque tools Sun Diagnostic tools, wheel balancers, vehicle lifts, tire changers, wheel aligners, air conditioning products and emission testers TreadReader Automotive tire drive-over ramps and handheld devices TruckCam Commercial vehicle OEM factory solutions Williams Hand tools, tool storage, certain equipment and related accessories 2022 ANNUAL REPORT 7 Financial Services Snap-on also generates revenue from various financing programs that include: (i) installment sales and lease contracts arising from franchisees’ customers and Snap-on customers who require financing for the purchase or lease of tools, diagnostics, and equipment products on an extended-term payment plan; and (ii) business and vehicle loans and leases to franchisees.
Some of the major trade names and trademarks and the products and services with which they are associated include the following: Names Products and Services Snap-on Hand tools, power tools, tool storage products (including tool control software and hardware), diagnostics, certain equipment and related accessories, mobile tool stores, websites, electronic parts catalogs, warranty analytics solutions, business management systems and services, OEM specialty tools and equipment development and distribution, and OEM facilitation services ATI Aircraft hand tools and machine tools AutoCrib Asset and tool control systems autoVHC Vehicle inspection and training services BAHCO Saw blades, cutting tools, pruning tools, hand tools, power tools and tool storage, including tool control systems Blackhawk Collision repair equipment Blue-Point Hand tools, power tools, tool storage, diagnostics, certain equipment and related accessories Car-O-Liner Collision repair equipment, and information and truck alignment systems Cartec Safety testing, brake testers, test lane equipment, dynamometers, suspension testers, emission testers and other equipment CDI Torque tools Challenger Vehicle lifts Cognitran OEM SaaS products Dealer-FX Service operation solutions and OEM SaaS systems Ecotechnics Vehicle air conditioning service equipment Fastorq Hydraulic torque and tensioning products Fish and Hook Saw blades, cutting tools, pruning tools, hand tools, power tools and tool storage Hofmann Wheel balancers, vehicle lifts, tire changers, wheel aligners, brake testers and test lane equipment Irimo Saw blades, cutting tools, hand tools, power tools and tool storage John Bean Wheel balancers, vehicle lifts, tire changers, wheel aligners, brake testers and test lane equipment Josam Heavy duty alignment and collision repair solutions Lindström Hand tools Mitchell1 Repair and service information, shop management systems and business services Mountz Torque tools Nexiq Diagnostic tools, information and program distributions for fleet and heavy duty equipment Norbar Torque tools Power Hawk Rescue tools and related equipment for military, government, fire and rescue Pro-Cut Brake service equipment and accessories Sandflex Hacksaw blades, bandsaws, saw blades, hole saws and reciprocating saw blades ShopKey Repair and service information, shop management systems and business services Sioux Power tools Sturtevant Richmont Torque tools Sun Diagnostic tools, wheel balancers, vehicle lifts, tire changers, wheel aligners, air conditioning products and emission testers TreadReader Automotive tire drive-over ramps and handheld devices TruckCam Commercial vehicle OEM factory solutions Williams Hand tools, tool storage, certain equipment and related accessories 2023 ANNUAL REPORT 7 Financial Services Snap-on also generates revenue from various financing programs that include: (i) installment sales and lease contracts arising from franchisees’ customers and Snap-on customers who require financing for the purchase or lease of tools, diagnostics, and equipment products on an extended-term payment plan; and (ii) business and vehicle loans and leases to franchisees.
While new technologies, including those associated with alternative energy drivetrains and greater vehicle autonomy, may alter the nature of certain service and repair for particular vehicle types, we believe many of these new technologies provide opportunities to fulfill requirements for enhanced solutions or increased precision.
While new technologies, including those associated with alternative energy drivetrains and greater vehicle autonomy, may alter the nature of certain service and repair for particular vehicle types, we believe many of these new technologies provide opportunities to fulfill requirements for enhanced solutions or greater precision.
Snap-on will also post any amendments to these documents, or information about any waivers granted to directors or executive officers with respect to the Code of Business Conduct and Ethics, on the company’s website at www.snapon.com . 2022 ANNUAL REPORT 5 Products and Services Tools; Diagnostics, Information and Management Systems; and Equipment Snap-on offers a broad line of products and complementary services that are grouped into three product categories: (i) tools; (ii) diagnostics, information and management systems; and (iii) equipment.
Snap-on will also post any amendments to these documents, or information about any waivers granted to directors or executive officers with respect to the Code of Business Conduct and Ethics, on the company’s website at www.snapon.com . 2023 ANNUAL REPORT 5 Products and Services Tools; Diagnostics, Information and Management Systems; and Equipment Snap-on offers a broad line of products and complementary services that are grouped into three product categories: (i) tools; (ii) diagnostics, information and management systems; and (iii) equipment.
Savings from Snap-on’s RCI initiatives reflect benefits from a wide variety of ongoing efficiency, productivity and process improvements, including savings generated from product design cost reductions, improved manufacturing line set-up and change-over practices, lower-cost sourcing initiatives and facility consolidations. 4 SNAP-ON INCORPORATED Snap-on’s primary customer segments include: (i) commercial and industrial customers, including professionals in critical industries and emerging markets; (ii) professional vehicle repair technicians who purchase products through the company’s mobile tool distribution network; and (iii) other professional customers related to vehicle repair, including owners and managers of independent and original equipment manufacturer (“OEM”) dealership service and repair shops (“OEM dealerships”).
Savings from Snap-on’s RCI initiatives reflect benefits from a wide variety of ongoing efficiency, productivity and process improvements, including savings generated from product design cost reductions, improved manufacturing line set-up and change-over practices, lower-cost sourcing initiatives and facility consolidations. 4 SNAP-ON INCORPORATED Snap-on’s primary customer segments include: (i) commercial and industrial customers, including professionals in critical industries and in emerging markets; (ii) professional vehicle repair technicians who purchase products through the company’s multinational mobile tool distribution network; and (iii) other professional customers related to vehicle repair, including owners and managers of independent service and repair shops, as well as original equipment manufacturer (“OEM”) dealership service and repair shops (“OEM dealerships”).
Snap-on also has a company-owned route program that is designed to: (i) provide another pool of potential field organization personnel; (ii) service customers in select new and/or open routes not currently serviced by franchisees; and (iii) allow Snap‑on to pilot new sales and promotional ideas prior to introducing them to franchisees.
Snap-on also has a company-owned route program that is designed to: (i) provide another pool of potential field organization personnel; (ii) service customers in select new and/or open routes not currently serviced by franchisees; and (iii) allow Snap‑on to pilot new sales and promotional ideas before introducing them to franchisees.
The industrial sector for Snap-on focuses on providing value-added products and services to an increasingly expanding global base of customers in critical industries. 8 SNAP-ON INCORPORATED The industrial sector is characterized by a highly competitive environment with multiple suppliers offering either a full line or industry-specific portfolios for tools and equipment.
The industrial sector for Snap-on focuses on providing value-added products and services to an increasingly expanding global base of customers in critical industries. The industrial sector is characterized by a highly competitive environment with multiple suppliers offering either a full line or industry-specific portfolios for tools and equipment.
Snap-on believes it is a leading manufacturer and distributor of professional tools, tool storage, diagnostics, equipment products, and repair software and solutions, offering a broad line of these products to both vehicle service and industrial marketplaces. Various competitors target and sell to professional technicians in the vehicle service and repair sector through the mobile tool distribution channel.
Snap-on is a leading manufacturer and distributor of professional tools, tool storage, diagnostics, equipment products, and repair software and solutions, offering a broad line of these products to both vehicle service and industrial marketplaces. Various competitors target and sell to professional technicians in the vehicle service and repair sector through the mobile tool distribution channel.
Financial Services consists of the business operations of Snap-on Credit LLC (“SOC”), the company’s financial services business in the United States, and Snap-on’s other financial services subsidiaries in those international markets where Snap-on has franchise operations. See Note 20 to the Consolidated Financial Statements for information on business segments and foreign operations.
Financial Services consists of the business operations of Snap-on Credit LLC (“SOC”), the company’s financial services business in the United States, and Snap-on’s other financial services subsidiaries in those international markets where Snap-on has franchise operations. See Note 19 to the Consolidated Financial Statements for information on business segments and foreign operations.
Additional information related to these plans is included in Notes 12, 13 and 14 to the Consolidated Financial Statements. Other benefits, including skill training and tuition assistance programs, are available to employees, but vary from location to location. • Snap-on seeks to advance our progress on diversity and inclusion within our company and is committed to providing equal opportunities.
Additional information related to these plans is included in Notes 11 and 13 to the Consolidated Financial Statements. Other benefits, including skill training and tuition assistance programs, are available to employees, but vary from location to location. • Snap-on seeks to advance our progress on diversity and inclusion within our company and is committed to providing equal opportunities.
The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s multi-national mobile tool distribution channel. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM dealerships, through direct and distributor channels.
The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s multinational mobile tool distribution channel. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM dealerships, through direct and distributor channels.
To date, over 250,000 students have earned Snap-on certifications, preparing them for successful and satisfying careers across various technical disciplines.
To date, over 300,000 students have earned Snap-on certifications, preparing them for successful and satisfying careers across various technical disciplines.
Annual employee training is used to reinforce ethics, environmental matters, health and safety, human rights, information security and regulatory compliance, which includes anti-corruption training for all relevant employees. Social Responsibility and Sustainability Commitment Snap-on is deeply dedicated to honoring and celebrating the dignity of work.
Annual employee training is used to reinforce ethics, environmental matters, health and safety, human rights, informatio n/cyber security and regulatory compliance, which includes anti-corruption training for all relevant employees. Social Responsibility and Sustainability Commitment Snap-on is deeply dedicated to honoring and celebrating the dignity of work.
Snap-on’s SASB Index is available under “ESG Reporting” in the “Investors” section on the company’s website at www.snapon.com .
Snap-on’s SASB Index is available under “ESG Reporting” in the “Investors” section of the company’s website at www.snapon.com .
Examples of products that have features or designs that benefit from patent protection include hand tools (including sealed ratchets and ratcheting screwdrivers), power tools, wheel alignment systems, wheel balancers, tire changers, vehicle lifts, tool storage, tool control, collision measurement, test lane equipment, brake lathes, electronic torque instruments, emissions-sensing devices and diagnostic equipment.
Examples of products that have features or designs that benefit from patent protection include hand tools, power tools, wheel alignment systems, wheel balancers, tire changers, vehicle lifts, tool storage, tool control, collision measurement, test lane equipment, brake lathes, electronic torque instruments, emissions-sensing devices and diagnostic equipment.
The market for vehicle service and repair is driven by an increasing rate of technological change, car and truck population growth and increasing unit life, and the resulting effects of these changes on the businesses of both our suppliers and customers.
The market for vehicle service and repair is driven by an accelerating rate of technological change, car and truck population growth and increasing unit age, and the resulting effects of these changes on both our suppliers and customers.
While such regulations have historically created select opportunities for our business operations, the company continually monitors developments in this area. Human Capital Management As of December 31, 2022, Snap-on employed approximately 12,900 people worldwide, of which approximately 7,200 were employed in the United States and approximately 5,700 were outside the United States.
While such regulations have historically created select opportunities for our business operations, the company continually monitors developments in this area. Human Capital Management As of December 30, 2023, Snap-on employed approximately 13,200 people worldwide, of which approximately 7,500 were employed in the United States and approximately 5,700 were outside the United States.
Franchise fee revenue, including nominal, non-refundable initial and ongoing monthly fees (primarily for sales and business training, marketing and product promotion programs, and technology support), is recognized as the fees are earned. Franchise fee revenue totaled $18.4 million, $17.3 million and $16.2 million in fiscal 2022, 2021 and 2020, respectively.
Snap-on charges nominal initial and ongoing monthly franchise fees. Franchise fee revenue, including nominal, non-refundable initial and ongoing monthly fees (primarily for sales and business training, marketing and product promotion programs, and technology support), is recognized as the fees are earned. Franchise fee revenue totaled $18.7 million, $18.4 million and $17.3 million in fiscal 2023, 2022 and 2021, respectively.
As the vehicle service and repair sector consolidates (with more business conducted by national chains and franchised service centers), Snap-on believes these larger organizations can be serviced most effectively by sales people who can demonstrate and sell the full line of diagnostics, equipment, and services.
As the vehicle service and repair sector consolidates (with more business conducted by national chains and franchised service centers), Snap-on believes these larger organizations can be serviced most effectively by sales people who can demonstrate and sell the full line of diagnostics, equipment, and services. Snap-on also sells these products and services directly to OEMs and their franchised dealers.
Recent Acquisitions Snap-on has continued to broaden its business through a series of coherent acquisitions, which have expanded and enhanced Snap-on’s capabilities in a variety of critical industries and in its business operations serving primarily owners and managers of independent repair shops and OEM dealerships.
Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results. Recent Acquisitions Snap-on has continued to broaden its business through a series of coherent acquisitions, which have expanded and enhanced Snap-on’s capabilities in a variety of critical industries and in its business operations serving primarily owners and managers of independent repair shops and OEM dealerships.
While the company does experience raw material and component cost fluctuations, as well as availability variations from time to time and from operation to operation, including due to the ongoing COVID-19 pandemic and its impact on the global supply chain, Snap-on endeavors to employ its RCI processes to improve efficiencies and reduce waste to minimize the impact of any cost increases.
While the company does experience raw material and component cost fluctuations, as well as availability variations from time to time and from operation to operation, Snap-on endeavors to employ its RCI processes to improve efficiencies and reduce waste to minimize the impact of any cost increases.
Based on Snap-on’s most recently filed EEO-1 data, which is available under “ESG Reporting” in the “Investors” section of the company’s website at www.snapon.com , females constitute 26.0% and minorities constitute 23.5% of the company’s workforce in the United States.
Based on Snap-on’s most recently filed EEO-1 data, which is available under “ESG Reporting” in the “Investors” section of the company’s website at www.snapon.com , females constitut e 26.4% and minorities constitute 25.2% of th e company’s workforce in the United States.
The following table shows the consolidated net sales of these product categories for the last three years: Net Sales (Amounts in millions) 2022 2021 2020 Product Category: Tools $ 2,399.4 $ 2,343.0 $ 1,984.7 Diagnostics, information and management systems 942.4 892.5 783.8 Equipment 1,151.0 1,016.5 824.0 $ 4,492.8 $ 4,252.0 $ 3,592.5 The tools product category includes hand tools, power tools, tool storage products and other similar products.
The following table shows the consolidated net sales of these product categories for the last three years: Net Sales (Amounts in millions) 2023 2022 2021 Product Category: Tools $ 2,528.9 $ 2,399.4 $ 2,343.0 Diagnostics, information and management systems 991.2 942.4 892.5 Equipment 1,210.1 1,151.0 1,016.5 $ 4,730.2 $ 4,492.8 $ 4,252.0 The tools product category includes hand tools, power tools, tool storage products and other similar products.
Snap-on’s OEM facilitation business provides OEMs with products and services including special and essential tools as well as consulting and facilitation services, which include product procurement, distribution and administrative support to customers for their dealership equipment programs.
Snap-on’s OEM facilitation business provides OEMs and OEM dealerships with products and services including special and essential tools as well as consulting and facilitation services, which are comprised of product procurement, distribution and administrative support for dealership equipment programs.
Snap-on strives to maintain a safe workplace and expects its employees to broadly embrace the company’s safety programs. Snap-on invests in its strong safety culture and in elevating the importance of worker safety throughout all levels of the organization.
As a permanent priority agenda item at all operational meetings, safety comes first. Snap-on strives to maintain a safe workplace and expects its employees to broadly embrace the company’s safety programs. Snap-on invests in its strong safety culture and in elevating the importance of worker safety throughout all levels of the organization.
Industrial customers increasingly require specialized solutions that provide repeatability and reliability in performing tasks of consequence that are specific to the particular end market in which they operate. Snap-on believes it is a meaningful participant in the industrial tools and equipment market sector.
Industrial customers increasingly require specialized solutions that provide repeatability and reliability in performing tasks of consequence that are specific to the particular end market in which they operate.
The company strives to protect environmental quality and human welfare in its workplaces and in its communities by implementing sound policies designed to prevent, mitigate and reduce the company’s impact on the environment.
Snap-on prioritizes continuous improvement in all facets of its operations, including environmental matters and health and safety. The company strives to protect environmental quality and human welfare in its workplaces and in its communities by implementing sound policies designed to prevent, mitigate and reduce the company’s impact on the environment.
As of 2022 year end, company-owned routes comprised approximately 4% of the total route population. Snap-on may elect to increase or reduce the number of company-owned routes in the future.
As of 2023 year end, company-owned routes comprised approximately 5% of the total route population. Snap-on may elect to increase or reduce the number of company-owned routes in the future. As of 2023 year end, Snap-on’s total route count was approximately 4,700, including approximately 3,400 routes in the United States.
Snap-on also sells these products and services directly to OEMs and their franchised dealers. 2022 ANNUAL REPORT 9 Snap-on brand tools and equipment are marketed to industrial and governmental customers worldwide through both industrial sales associates and independent distributors. Selling activities focus on industrial customers whose main purchase criteria are quality and integrated solutions.
Snap-on brand tools and equipment are marketed to industrial and governmental customers worldwide through both industrial sales associates and independent distributors. Selling activities focus on industrial customers whose main purchase criteria are quality and integrated solutions.
Sales through the company’s e-commerce distribution channel were not significant in any of the last three years. Competition Snap-on competes on the basis of its product quality and performance, product line breadth and depth, service, brand awareness and imagery, technological innovation and availability of financing (through SOC or its international finance subsidiaries).
Competition Snap-on competes on the basis of its product quality and performance, product line breadth and depth, service, brand awareness and imagery, technological innovation and availability of financing (through SOC or its international finance subsidiaries).
For 2022, Snap-on had an overall safety incident rate of 1.12 (number of injuries and illnesses multiplied by 200,000, divided by hours worked). • Snap-on is committed to its employees and provides developmental opportunities, as well as competitive pay and benefits.
For 2023, Snap-on had an overall safety incident rate of 1.16 (nu mber of injuries and illnesses multiplied by 200,000, divided by hours worked). • Snap-on is committed to its employees and provides developmental opportunities throughout the organization.
In many of these markets, as in the United States, purchase decisions are generally made or influenced by professional vehicle service technicians as well as repair shop owners and managers. As of 2022 year end, Snap-on’s worldwide route count was approximately 4,725, including approximately 3,400 routes in the United States.
In many of these markets, as in the United States, purchase decisions are generally made or influenced by professional vehicle service technicians as well as repair shop owners and managers.
As of 2022 year end, Snap-on had industrial sales associates and independent distributors primarily in the United States, Canada and in various European, Latin American, Middle Eastern, Asian and African countries, with the United States representing the majority of Snap-on’s total industrial sales.
As of 2023 year end, Snap-on had industrial sales associates and independent distributors primarily in the United States, Canada and in various European, Latin American, Middle Eastern, Asian and African countries, with the United States representing the majority of Snap-on’s total industrial sales. 2023 ANNUAL REPORT 9 Snap-on also sells software, services and solutions to the automotive, commercial, heavy duty, agriculture, power equipment and power sports segments.
Furthermore, through our Snap-on Value Creation Processes, a suite of principles we use every day, the company remains committed to the areas of safety, quality, customer connection, innovation and RCI, which are closely linked to and contribute to improving employee engagement, productivity, and efficiency.
Furthermore, through our Snap-on Value Creation Processes, a suite of principles we use every day, the company remains committed to the areas of safety, quality, customer connection, innovation and RCI, which are closely linked to and contribute to improving employee engagement, productivity, and efficiency. 2023 ANNUAL REPORT 11 Successful execution of our way forward is dependent on attracting, developing and retaining key employees and members of our management team, which we achieve through the following: • Snap-on believes strongly in workplace safety.
In recent years, there has been an increase in the development and sales of electric and hybrid vehicles and this trend is expected to continue. Snap-on has historically benefited from the increasing complexity of car and truck fleets and the changing tools, technologies and data needed to monitor, calibrate, service and repair evolving vehicle platforms.
Snap-on has historically benefited from the increasing complexity of car and truck fleets and the changing tools, technologies and data needed to monitor, calibrate, service and repair evolving vehicle platforms.
Snap-on evaluates the performance of its operating segments based on segment revenues, including both external and intersegment net sales, and segment operating earnings. Snap-on accounts for intersegment sales and transfers based primarily on standard costs with reasonable mark-ups established between the segments. Identifiable assets by segment are those assets used in the respective reportable segment’s operations.
Snap-on accounts for intersegment net sales and transfers based primarily on standard costs with reasonable mark-ups established between the segments. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Corporate assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other assets.
U.S. franchisees are provided a list of calls that serves as the basis of the franchisee’s sales route. Snap-on’s franchisees also have the opportunity to add a limited number of additional franchises. Snap-on charges nominal initial and ongoing monthly franchise fees.
Franchisees purchase Snap-on’s products at a discount from suggested list prices and resell them at prices established by the franchisee. U.S. franchisees are provided a list of calls that serves as the basis of the franchisee’s sales route. Snap-on’s franchisees also have the opportunity to add a limited number of additional franchises.
Franchisees’ sales are concentrated in hand and power tools, tool storage products, shop equipment, diagnostics, and repair information products, which can be transported in a van or trailer and demonstrated during a sales call. Franchisees purchase Snap-on’s products at a discount from suggested list prices and resell them at prices established by the franchisee.
Snap-on’s franchisees primarily serve vehicle repair technicians and vehicle service shop owners, generally providing weekly contact at the customer’s place of business. Franchisees’ sales are concentrated in hand and power tools, tool storage products, shop equipment, diagnostics, and repair information products, which can be transported in a van or trailer and demonstrated during a sales call.
Snap-on’s sustainability framework is focused on key areas impacting our industry, including energy management, employee health and safety, and material management, and is aligned with the standards of the Value Reporting Foundation (formerly known as the Sustainability Accounting Standards Board or “SASB”), which has been consolidated into the International Financial Reporting Standards Foundation.
In 2023 , the company’s total Scope 1 and Scope 2 GHG emissions of 99,021 metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of 20.9 (metric tons of CO2e, divided by net sales in millions). 12 SNAP-ON INCORPORATED Snap-on’s sustainability framework is focused on key areas impacting our industry, including energy management, employee health and safety, and material management, and is aligned with the principles of the International Financial Reporting Standards Foundation (formerly known as the Sustainability Accounting Standards Board or “SASB”), which has been consolidated into the International Financial Reporting Standards Foundation.
Additionally, on a global basis, approximately 2,600 employees are represented by unions and/or covered under collective bargaining agreements with varying expiration dates through 2025.
Additionally, on a global basis, approximately 2,700 employees are represented by unions and/or covered under collective bargaining agreements with varying expiration dates through 2026. In recent years, Snap-on has not experienced any significant work slowdowns, stoppages or other labor disruptions.
Snap-on has adopted policies that seek to eliminate human trafficking, slavery, forced labor and child labor from its global supply chain, and has formalized its commitment to protecting human rights in the company’s Human Rights Policy. 12 SNAP-ON INCORPORATED Snap-on prioritizes continuous improvement in all facets of its operations, including environmental matters and health and safety.
These beliefs go beyond Snap-on and are expected of suppliers as detailed in the company’s Supplier Code of Conduct. Snap-on has adopted policies that seek to eliminate human trafficking, slavery, forced labor and child labor from its global supply chain, and has formalized its commitment to protecting human rights in the company’s Human Rights Policy.
The site features an online catalog of Snap-on hand tools, power tools, tool storage units and diagnostic equipment available to customers in the United States, the United Kingdom, Canada and Australia. E-commerce and certain other system enhancement initiatives are designed to improve productivity and further leverage the one-on-one relationships and service Snap-on has with its current and prospective customers.
E-commerce Snap-on offers current and prospective customers online access to research and purchase products through its public website, www.snapon.com . The site features an online catalog of Snap-on hand tools, power tools, tool storage units and diagnostic equipment available to customers in the United States, the United Kingdom, Canada and Australia.
Distributors Sales of certain tools and equipment are made through independent distributors who purchase the items from Snap-on and resell them to end users. Hand tools marketed under the BAHCO, Irimo, Lindström, CDI, ATI, Fastorq, Norbar, Sioux, Sturtevant Richmont and Williams brands and trade names, for example, are sold through distributors worldwide.
Hand tools marketed under the ATI, BAHCO, CDI, Fastorq, Irimo, Lindström, Mountz, Norbar, Sioux, Sturtevant Richmont and Williams brands and trade names, for example, are sold through distributors worldwide. Asset and tool control solutions are sold under the AutoCrib brand primarily through distributors worldwide.
Sales relating to any single patent did not represent a material portion of Snap-on’s revenues in any of the last three years.
As of 2023 year end, Snap-on and its subsidiaries held approximately 890 active and pending patents in the United States and approximately 3,170 active and pending patents outside of the United States. Sales relating to any single patent did not represent a material portion of Snap-on’s revenues in any of the last three years.
Leadership reviews to identify high potential talent in the organization are conducted on an ongoing basis with all business units and on an annual basis with the Board of Directors. Snap-on offers pension, postretirement health care benefits and stock-based compensation as well as other stock plans, including an employee stock purchase plan for associates in the United States and Canada.
Leadership reviews to identify high potential talent in the organization are conducted on an ongoing basis with all business units and on an annual basis with the Board of Directors.
Asset and tool control solutions are sold under the AutoCrib brand primarily through distributors worldwide. Wheel service and other vehicle service equipment are sold through distributors primarily under brands including Hofmann, John Bean, Car-O-Liner, Challenger, Pro-Cut, Cartec, Blackhawk and Ecotechnics.
Wheel service and other vehicle service equipment are sold through distributors primarily under brands including Blackhawk, Car-O-Liner, Cartec, Challenger, Ecotechnics, Hofmann, John Bean, and Pro-Cut. Diagnostics and equipment products are marketed through distributors in South America and Asia, and through both a direct sales force and distributors in Europe under the Snap-on, Blue-Point and Sun brands.
Snap-on also sells software, services and solutions to the automotive, commercial, heavy duty, agriculture, power equipment and power sports segments. Products and services are marketed to targeted groups, including OEMs and their dealerships, fleets and individual repair shops. To effectively reach OEMs, which frequently have a multi-national presence, Snap-on has deployed focused business teams globally.
Products and services are marketed to targeted groups, including OEMs and their dealerships, fleets and individual repair shops. To effectively reach OEMs, which frequently have a multinational presence, Snap-on has deployed focused business teams globally. Distributors Sales of certain tools and equipment are made through independent distributors who purchase the items from Snap-on and resell them to end users.
Distribution Channels Snap-on serves customers primarily through the following channels of distribution: (i) the mobile van channel; (ii) company direct sales; (iii) distributors; and (iv) e-commerce. The following discussion summarizes Snap-on’s general approach for each channel and is not intended to be all-inclusive.
Snap-on believes it is a meaningful participant in the industrial tools and equipment market sector. 8 SNAP-ON INCORPORATED Distribution Channels Snap-on serves customers primarily through the following channels of distribution: (i) the mobile van channel; (ii) company direct sales; (iii) distributors; and (iv) e-commerce.
The company does not currently anticipate experiencing any significant impact in 2023 from raw material and purchased component cost or availability issues. 10 SNAP-ON INCORPORATED To date, the company has not observed any meaningful supply shortages or cost increases directly or indirectly resulting from climate change factors.
To date, the company has not observed any meaningful supply shortages or cost increases directly or indirectly resulting from climate change factors. 10 SNAP-ON INCORPORATED Patents, Trademarks and Other Intellectual Property Snap-on vigorously pursues and relies on patent protection to safeguard its intellectual property and position in its markets.
Mobile Van Channel In the United States, a significant portion of sales to the vehicle service and repair sector is conducted through Snap‑on’s mobile franchise van channel. Snap-on’s franchisees primarily serve vehicle repair technicians and vehicle service shop owners, generally providing weekly contact at the customer’s place of business.
The following discussion summarizes Snap-on’s general approach for each channel and is not intended to be all-inclusive. Mobile Van Channel In the United States, a significant portion of sales to the vehicle service and repair sector is conducted through Snap‑on’s mobile franchise van channel.
In recent years, Snap-on has not experienced any significant work slowdowns, stoppages or other labor disruptions. 2022 ANNUAL REPORT 11 Snap-on is guided by the beliefs and values in the company’s “Who We Are” mission statement and strives to be the “employer of choice” for its current and future associates.
Snap-on is guided by the beliefs and values in the company’s “Who We Are” mission statement and strives to be the “employer of choice” for its current and future associates. Our “Who We Are” beliefs serve as the guidepost against which we evaluate performance in operating reviews throughout the company.
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Corporate assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other assets. All intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.
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Snap-on evaluates the performance of its operating segments based on segment revenues and segment operating earnings. The Snap-on Tools Group segment revenues include external net sales, while the Commercial & Industrial Group and the Repair Systems & Information Group segment revenues include both external and intersegment net sales.
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Diagnostics and equipment products are marketed through distributors in South America and Asia, and through both a direct sales force and distributors in Europe under the Snap-on, Sun and Blue-Point brands. E-commerce Snap-on offers current and prospective customers online access to research and purchase products through its public website, www.snapon.com .
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E-commerce and certain other system enhancement initiatives are designed to improve productivity and further leverage the one-on-one relationships and service Snap-on has with its current and prospective customers. Sales through the company’s e-commerce distribution channel were not significant in any of the last three years.
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Patents, Trademarks and Other Intellectual Property Snap-on vigorously pursues and relies on patent protection to safeguard its intellectual property and position in its markets. As of 2022 year end, Snap-on and its subsidiaries held approximately 870 active and pending patents in the United States and approximately 2,780 active and pending patents outside of the United States.
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The company does not currently anticipate any significant impact in 2024 from raw material and purchased component cost or availability issues.
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Our “Who We Are” beliefs serve as the guidepost against which we evaluate performance in operating reviews throughout the company.
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Snap-on offers competitive compensation and benefits to its employees, including performance-based and stock-based management incentive plans, an employee stock purchase plan for associates in the U.S. and Canada, as well as pension plans covering most U.S. employees and certain employees in foreign countries.
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Successful execution of our way forward is dependent on attracting, developing and retaining key employees and members of our management team, which we achieve through the following: • Snap-on believes strongly in workplace safety. As a permanent priority agenda item at all operational meetings, safety comes first.
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These beliefs go beyond Snap-on and are expected of suppliers as detailed in the company’s Supplier Code of Conduct.
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In 2022, the company’s total GHG emissions of 101,805 metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of 22.7 (metric tons of CO2e, divided by net sales in millions), which is over 40% lower than when initially reported in 2008.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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While we believe we will have the ability to service our debt and obtain additional resources in the future if and when needed, that will depend upon our results of operations and financial position at the time, the then-current state of the credit and financial markets, and other factors that may be beyond our control.
While we believe we will have the ability to service our debt and obtain additional financial resources in the future if and when needed, that will depend upon our results of operations and financial position at the time, the then-current state of the credit and financial markets, and other factors that may be beyond our control.
The recognition of impairment charges on goodwill or other intangible assets would adversely impact our future financial condition and results of operations. We have a substantial amount of goodwill and purchased intangible assets, almost all of which are booked in the Commercial & Industrial Group and in the Repair Systems & Information Group.
The recognition of impairment charges on goodwill or other intangible assets could adversely impact our future financial condition and results of operations. We have a substantial amount of goodwill and purchased intangible assets, almost all of which are booked in the Commercial & Industrial Group and in the Repair Systems & Information Group.
Approximately 28% of our revenues in 2022 were generated outside of the United States. Future growth rates and success of our business depends in large part on continued growth in our non-U.S. operations, including growth in emerging markets and critical industries. Numerous risks and uncertainties affect our non-U.S. operations.
Approximately 28% of our revenues in 2023 were generated outside of the United States. Future growth rates and success of our business depends in large part on continued growth in our non-U.S. operations, including growth in emerging markets and critical industries. Numerous risks and uncertainties affect our non-U.S. operations.
In association with initiatives to better integrate business units, rationalize our operating footprint and improve responsiveness to franchisees and customers, Snap-on is continually enhancing its global Enterprise Resource Planning (ERP) management information systems.
In association with initiatives to better integrate business units, optimize our operating footprint and improve responsiveness to franchisees and customers, Snap-on is continually enhancing its global Enterprise Resource Planning (ERP) management information systems.
In addition, transitions of important responsibilities to new individuals inherently include the possibility of disruptions to our business and operations, which could negatively affect our business, financial condition, results of operations and cash flows. We may not successfully integrate businesses we acquire, which could have an adverse impact on our business, financial condition, results of operations and cash flows.
In addition, transitions of important responsibilities to new individuals inherently include the possibility of disruptions to our operations, which could negatively affect our business, financial condition, results of operations and cash flows. 16 SNAP-ON INCORPORATED We may not successfully integrate businesses we acquire, which could have an adverse impact on our business, financial condition, results of operations and cash flows.
Petroleum and energy prices have periodically increased significantly over short periods of time; future volatility and changes may be caused by market fluctuations, supply and demand, currency fluctuations, production and transportation disruptions, climate change regulations, world events, including armed conflicts, and changes in governmental programs.
Petroleum and energy prices have periodically increased significantly over short periods of time; future volatility and changes may be caused by market fluctuations, supply and demand, currency fluctuations, production and transportation disruptions, climate change regulations, world events, including armed conflicts, and governmental actions.
Inability to access credit or capital markets, or a deterioration in the terms on which financing might be available, could have an adverse impact on our business, financial condition, results of operations and cash flows. 18 SNAP-ON INCORPORATED Increasing our financial leverage could affect our operations and profitability.
Inability to access credit or capital markets, or a deterioration in the terms on which financing might be available, could have an adverse impact on our business, financial condition, results of operations and cash flows. Increasing our financial leverage could affect our operations and profitability.
If we were to incur a substantial charge or are unable to effectively manage our cost reduction and restructuring efforts, our business, financial condition, results of operations and cash flows could be adversely affected in certain periods. 2022 ANNUAL REPORT 17 Financial Risks Our inability to provide acceptable financing alternatives to franchisees and other end-user customers could adversely impact our operating results.
If we were to incur a substantial charge or are unable to effectively manage our cost reduction and restructuring efforts, our business, financial condition, results of operations and cash flows could be adversely affected in certain periods. Financial Risks Our inability to provide acceptable financing alternatives to franchisees and other end-user customers could adversely impact our operating results.
Risks related to this situation include supply chain inefficiencies, price increases and shortages of raw materials and components, exchange rate volatility, energy shortages in Europe, an increase in cybersecurity incidents, and potential impairment of certain assets.
Risks related to this situation include supply chain inefficiencies, price increases and shortages of raw materials and components, increased trade sanctions, exchange rate volatility, energy shortages in Europe, an increase in cybersecurity incidents, and potential impairment of certain assets.
Our information systems, like those of other companies, are susceptible to malicious damage, intrusions and outages due to, among other events, viruses, cyber attacks, industrial espionage, phishing attempts, hacking, break-ins and similar events, as well as other breaches of security, natural disasters, power loss or telecommunications failures.
Our information systems, like those of other companies and our third party service providers, are susceptible to malicious damage, intrusions and outages due to, among other events, viruses, cyber attacks, industrial espionage, phishing attempts, hacking, break-ins and similar events, as well as other breaches of security, natural disasters, power loss or telecommunications failures.
In early March 2022, as previously disclosed, Snap-on detected unusual activity in some areas of its information technology environment, quickly took down its network connections as part of the company’s defense protocols, launched a comprehensive analysis assisted by a leading external forensics firm, and notified law enforcement.
In the first quarter of 2022, as previously disclosed, Snap-on detected unusual activity in some areas of its information technology environment, quickly took down its network connections as part of the company’s defense protocols, launched a comprehensive analysis assisted by a leading external forensics firm, and notified law enforcement.
The company’s allowances may not be adequate to cover actual losses, and future provisions for credit losses could materially and adversely affect our financial condition, results of operations and cash flows. Foreign operations are subject to currency exchange, inflation, interest and other risks that could adversely affect our business, financial condition, results of operations and cash flows.
The company’s allowances may not be adequate to cover actual losses, and future provisions for credit losses could materially and adversely affect our financial condition, results of operations and cash flows. 2023 ANNUAL REPORT 17 Foreign operations are subject to currency exchange, inflation, interest and other risks that could adversely affect our business, financial condition, results of operations and cash flows.
While we believe that advances in vehicle technologies provide us with opportunities to develop innovative products and solutions for the vehicle repair market, if we are not able to execute on those possibilities, our business and results of operations could suffer. 2022 ANNUAL REPORT 13 The performance of Snap-on’s mobile tool distribution business depends on the success of its franchisees.
While we believe that advances in vehicle technologies provide us with opportunities to develop innovative products and solutions for the vehicle repair market, if we are not able to effectively execute on those possibilities, our business and results of operations could suffer. The performance of Snap-on’s mobile tool distribution business depends on the success of its franchisees.
Changes in plan demographics, including an increase in the number of retirements or changes in life expectancy assumptions, may also increase the costs and funding requirements of the obligations related to the company’s pension plans. Our pension plan obligations are affected by changes in market interest rates.
Changes in plan demographics, including an increase in the number of retirements or changes in life expectancy assumptions, may also increase the costs and funding requirements of the obligations related to the company’s pension plans. 18 SNAP-ON INCORPORATED Our pension plan obligations are affected by changes in market interest rates.
Future problems that impair or compromise the company’s information technology infrastructure, including those due to natural disasters, power outages, major network failures, security breaches or malicious attacks, or those occurring during system upgrades and/or new system implementations could impede our operations.
Future problems that impair or compromise the company’s information technology infrastructure, or that of our third party service providers, including those due to natural disasters, power outages, major network failures, security breaches or malicious attacks, or those occurring during system upgrades and/or new system implementations could impede our operations.
The company’s leverage ratio may affect both our availability of additional capital resources as well as our operations in several ways, including: • The terms on which credit may be available to us could be less attractive, both in the economic terms of the credit and the covenants stipulated by the credit terms; • The possible lack of availability of additional credit or access to the commercial paper market; • The potential for higher levels of interest expense to service or maintain our outstanding debt; • The possibility of additional borrowings in the future to repay our indebtedness when it comes due; and • The possible diversion of capital resources from other uses.
While there are no current borrowings under the credit facility, future borrowings and the resulting increase in the company’s leverage ratio may affect both our availability of additional capital resources as well as our operations in several ways, including: • The terms on which credit may be available to us could be less attractive, both in the economic terms of the credit and the covenants stipulated by the credit terms; • The possible lack of availability of additional credit or access to the commercial paper market; • The potential for higher levels of interest expense to service or maintain our outstanding debt; • The possibility of additional borrowings in the future to repay our indebtedness when it comes due; and • The possible diversion of capital resources from other uses.
We, our franchisees and our customers, and the economy as a whole, also may be affected by future world or local events outside our control, such as tariffs and other trade protection measures put in place by the United States or other countries, acts of terrorism, developments in the war on terrorism, armed conflicts (including the current war in Ukraine), civil unrest, conflicts in international situations, weather events and natural disasters, outbreaks of infectious diseases such as the ongoing COVID-19 pandemic, as well as government-related developments or issues, including changes in tax laws and regulations, new or enhanced regulations related to climate change and other sustainability matters, and changes in financial accounting standards.
We, our franchisees and our customers, and the economy as a whole, also may be affected by future world or local events outside our control, such as tariffs and other trade protection measures put in place by the United States or other countries, acts of terrorism, developments in the war on terrorism, armed conflicts (including the current war in Ukraine, an escalation of the conflict in the Middle East, and other regional conflicts), civil unrest, conflicts in international situations, weather events and natural disasters, outbreaks of infectious diseases, as well as government-related developments or issues, including changes in tax laws and regulations, new or enhanced regulations related to climate change and other sustainability matters, and changes in financial accounting standards.
A significant decrease in market interest rates and a decrease in the fair value of plan assets would increase net pension expense and may adversely affect the company’s future results of operations. See Note 12 to the Consolidated Financial Statements for further information on the company’s pension plans.
A significant decrease in market interest rates and a decrease in the fair value of plan assets would increase net pension expense and may adversely affect the company’s future financial results. See Note 11 to the Consolidated Financial Statements for additional information on the company’s pension plans.
A decline in industry and/or economic conditions could have the potential to weaken the financial position of some of our customers, including financial services customers.
A decline in industry and/or economic conditions has the potential to weaken the financial position of some of our customers, including financial services customers.
In addition, outbreaks of infectious diseases, weather events, armed conflicts or other circumstances beyond our control could also impact the availability of raw materials and components. Physical risks of climate change may also impact the availability and cost of materials, sources and supply of energy and could also increase operating costs.
In addition, outbreaks of infectious diseases, weather events, armed conflicts, government actions (including those affecting trade) or other circumstances beyond our control could also impact the availability of raw materials and components. Physical risks of climate change may also impact the availability and cost of materials, sources and supply of energy and could also increase operating costs.
Price competition in our various industries is intense and pricing pressures from competitors and customers continue to increase. In general, as a manufacturer and marketer of premium products and services, the expectations of Snap-on’s customers and its franchisees are high.
We face strong competition in all of our market segments. Price competition in our various industries is intense and pricing pressures from competitors and customers continue to increase. In general, as a manufacturer and marketer of premium products and services, the expectations of Snap-on’s customers and its franchisees are high.
Approximately 43% of our consolidated net revenues in 2022 were generated by the Snap-on Tools Group, which consists of Snap-on’s business operations primarily serving vehicle service and repair technicians through the company’s multi-national mobile tool distribution channel.
Approximately 41% of our consolidated net revenues in 2023 were generated by the Snap-on Tools Group, which consists of Snap-on’s business operations primarily serving vehicle service and repair technicians through the company’s multinational mobile tool distribution channel.
We expect that the level of competition will remain high in the future, which could limit our ability to maintain or increase market share or profitability. 14 SNAP-ON INCORPORATED Foreign operations are subject to political, economic, trade and other risks that could adversely affect our business, financial condition, results of operations and cash flows.
We expect that the level of competition will remain high in the future, which, if not effectively matched or exceeded, could limit our ability to maintain or increase market share or profitability. Foreign operations are subject to political, economic, trade and other risks that could adversely affect our business, financial condition, results of operations and cash flows.
In the event of an infringement claim, we may also be required to spend significant resources to develop alternatives or obtain licenses, which may not be available on reasonable terms or at all, and may reduce our sales and disrupt our production.
In the event of an infringement claim, we may also be required to spend significant resources to develop alternatives or obtain licenses, which may not be available on reasonable terms or at all, and may reduce our sales and disrupt our production. The global tool, equipment, diagnostics, and repair information industries are competitive.
Techniques used to breach information technology systems are growing in sophistication and increasingly come from threat actors of all types, including individuals, criminal organizations and state-sponsored operatives.
Techniques used to breach information technology systems are growing in sophistication from emerging technologies, such as advanced forms of AI, and increasingly come from threat actors of all types, including individuals, criminal organizations and state-sponsored operatives.
These developments, and other potential future legislation and regulations, including the increasing global regulation of privacy rights, may also adversely affect the customers to which, and the markets into which, we sell our products, and increase our costs and otherwise negatively affect our business, reputation, results of operations and financial condition, including in ways that cannot yet be foreseen. 20 SNAP-ON INCORPORATED Product liability claims and litigation could affect our business, reputation, financial condition, results of operations and cash flows.
These developments, and other potential future legislation and regulations, including the increasing global regulation of privacy rights and use of AI, may also adversely affect the customers to which, and the markets into which, we sell our products, and increase our costs and otherwise negatively affect our business, reputation, results of operations and financial condition, including in ways that cannot yet be foreseen.
Failure to comply with any of these laws or regulations could also result in civil, criminal, monetary and/or non-monetary penalties, damage to our reputation, and/or the incurrence of remediation costs. In recent years there has been increased public awareness, concern and focus on environmental and sustainability issues, including matters related to global climate change.
Failure to comply with any of these laws or regulations could also result in civil, criminal, monetary and/or non-monetary penalties, damage to our reputation, and/or require significant remediation costs. 2023 ANNUAL REPORT 19 In recent years there has been increased public awareness, concern and focus on environmental and sustainability issues, including matters related to climate change, and we expect these trends to continue.
Energy price increases raise both our operating costs and the costs of our materials, and we may not be able to increase our prices enough to offset these costs in certain areas. Higher prices also may reduce the level of future customer orders and our profitability.
Energy price increases raise both our operating costs and the costs of our materials, and we may not be able to increase our prices enough to offset these costs in certain areas.
The March 2022 incident did not have a significant impact on the results of our operations; however, future cyber events could cause us to lose customers and/or revenue and could require us to incur significant expense to remediate, including as a result of legal or regulatory claims, proceedings, fines or penalties, and could also damage our reputation.
Future cyber events, however, could cause us to lose customers and/or revenue and could require us to incur significant expense to remediate, including as a result of legal or regulatory claims, proceedings, fines or penalties, and could also damage our reputation.
Our determination of whether impairment has occurred is based on a comparison of each of our reporting units’ fair market value with its carrying value. 2022 ANNUAL REPORT 19 Significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to long-term deterioration in macroeconomic, industry and market conditions, the loss of key customers, changes in technology or markets, changes in key personnel or litigation, a sustained decrease in share price and/or other events, could require a provision for impairment in a future period that could substantially impact our reported earnings and reduce our consolidated net worth and shareholders’ equity.
Significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to long-term deterioration in macroeconomic, industry and market conditions, the loss of key customers, changes in technology or markets, changes in key personnel or litigation, a sustained decrease in share price and/or other events, could require a provision for impairment in a future period that could substantially impact our reported earnings and reduce our consolidated net worth and shareholders’ equity.
Substantial fluctuations in the value of the U.S. dollar or other transactional currencies have had and, in the future, could have a significant impact on the company’s financial condition and results of operations. We are also affected by changes in inflation and interest rates in non-U.S. jurisdictions.
Substantial fluctuations in the value of the U.S. dollar or other transactional currencies have had and, in the future, could have a significant impact on the company’s financial condition and results of operations.
The information technology incident did not significantly affect the company’s financial results. 16 SNAP-ON INCORPORATED In response to the evolving cyber threat environment, we continue to invest in data security and address these risks and uncertainties by implementing security technologies, internal controls, network and data center resiliency, and redundancy and recovery processes, as well as by securing insurance.
In response to the evolving cyber threat environment, we continue to invest in data security and address these risks and uncertainties by implementing security technologies, internal controls, network and data center resiliency, and redundancy and recovery processes, as well as by securing insurance.
Increased regulatory requirements or standards may result in increased compliance or input costs, including those related to energy or raw materials, for us and our suppliers.
The timing of certain of these regulations has yet to be determined. Increased regulatory requirements or standards may result in increased compliance or input costs, including those related to energy or raw materials, for us and our suppliers.
Foreign Corrupt Practices Act, currency volatility, transportation delays or interruptions, sovereign debt uncertainties and difficulties in enforcement of contract and intellectual property rights, reputational risks related to, among other factors, different standards and practices among countries, as well as natural disasters, weather events and outbreaks of infectious diseases.
Foreign Corrupt Practices Act. Risks related to our non-U.S. operations could further include currency volatility, transportation delays or interruptions, sovereign debt uncertainties and difficulties in enforcement of contract and intellectual property rights, as well as reputational risks related to, among other factors, different standards and practices among countries.
Any prolonged disruption in the operations of our existing manufacturing facilities, whether due to technical or labor difficulties, facility consolidation or closure actions, lack of raw material or component availability, destruction of or damage to any facility (as a result of natural disasters, climate or weather events, use and storage of hazardous materials, armed conflicts, sabotage, terrorism, civil unrest or other events), or other reasons, including outbreaks of infectious diseases, such as the ongoing COVID-19 pandemic, could have a material adverse effect on our business, financial condition, results of operations and cash flows. 2022 ANNUAL REPORT 15 Price inflation and shortages of raw materials, components, certain purchased finished goods and energy sources have impacted, and in the future could adversely affect, the ability to obtain, as well as the cost of, needed materials or products and, in turn, our results of operations.
Any prolonged disruption in the operations of our existing manufacturing facilities, whether due to technical or labor difficulties, facility consolidation or closure actions, lack of raw material or component availability, destruction of or damage to any facility (as a result of natural disasters, climate or weather events, use and storage of hazardous materials, armed conflicts, sabotage, terrorism, civil unrest or other events), or other reasons, including outbreaks of infectious diseases, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
As we integrate, implement and deploy new information technology processes and enhance our information infrastructure across our global operations, we could experience disruptions in our business that could have an adverse effect on our business, financial condition, results of operations and cash flows.
As we integrate, implement and deploy new information technology processes and enhance our information infrastructure across our global operations, we could experience disruptions that could have an adverse effect on our business, financial condition, results of operations and cash flows. Failure to attract, retain and effectively manage qualified personnel could lead to a loss of revenue and/or profitability.
In addition, if we are unable to maintain effective relationships with franchisees, Snap-on or the franchisees may choose to terminate the relationship, which may result in: (i) open routes, in which end-user customers are not provided reliable service; (ii) litigation resulting from termination; (iii) reduced collections or increased charge-offs of franchisee receivables owed to Snap-on; and/or (iv) reduced collections or increased charge-offs of finance and contract receivables.
If our franchisees are not successful, or if we do not maintain an effective relationship with our franchisees, the delivery of products, the collection of receivables and/or our relationship with end users could be adversely affected and thereby negatively impact our business, financial condition, results of operations and cash flows. 2023 ANNUAL REPORT 13 In addition, if we are unable to maintain effective relationships with franchisees, Snap-on or the franchisees may choose to terminate the relationship, which may result in: (i) open routes, in which end-user customers are not provided reliable service; (ii) litigation resulting from termination; (iii) reduced collections or increased charge-offs of franchisee receivables owed to Snap-on; and/or (iv) reduced collections or increased charge-offs of finance and contract receivables.
Should the economic environment in our non-U.S. markets deteriorate from current levels, our results of operations and financial position could be materially impacted, including as a result of the effects of potential impairment write-downs of goodwill and/or other intangible assets related to these businesses. The United Kingdom (“U.K.”) has formally left the European Union (“Brexit”).
Should the economic environment in our non-U.S. markets deteriorate from current levels, our results of operations and financial position could be materially impacted, including as a result of the effects of potential impairment write-downs of goodwill and/or other intangible assets related to these businesses. 14 SNAP-ON INCORPORATED As part of the agreement related to the United Kingdom’s (“U.K.”) departure from the European Union (“Brexit”), there is a new series of customs and regulatory checks, including rules of origin and stringent local content requirements.
These include political, economic and social instability, such as acts of war, armed conflicts, civil disturbance or acts of terrorism, local labor conditions, trade relations with China, changes in government policies and regulations, including those intended to address climate change, imposition or increases in withholding and other taxes on remittances and other payments by international subsidiaries, as well as exposure to liabilities under anti-bribery and anti-corruption laws in various countries, such as the U.S.
These also include changes in government policies and regulations, including those intended to address climate change, imposition or increases in withholding and other taxes on remittances and other payments by international subsidiaries, increases in trade sanctions and other related measures, as well as exposure to liabilities under anti-bribery and anti-corruption laws in various countries, such as the U.S.
Failure to attract, retain and effectively manage qualified personnel could lead to a loss of revenue and/or profitability. Snap-on’s success depends, in part, on the efforts and abilities of its senior management team and other key employees whose skills, experience and industry contacts significantly benefit our operations and administration.
Snap-on’s success depends, in part, on the efforts and abilities of its senior management team and other key employees whose skills, experience and industry contacts significantly benefit our operations and administration.
Data security and information technology infrastructure and security are critical to supporting business objectives; failure of our systems to operate effectively could adversely affect our business and reputation. We depend heavily on information technology infrastructure to achieve our business objectives and to protect sensitive data, and we continually invest in improving such systems.
We depend heavily on information technology infrastructure to achieve our business objectives and to protect sensitive data, and we continually invest in improving such systems.
The products that we design and/or manufacture, and/or the services we provide, can lead to product liability claims or other legal claims being filed against us.
Product liability claims and litigation could affect our business, reputation, financial condition, results of operations and cash flows. The products that we design and/or manufacture, and/or the services we provide, can lead to product liability claims or other legal claims being filed against us.
We are required to perform impairment tests on our goodwill and other intangibles annually or at any time when events occur that could impact the value of our business segments.
We are required to perform impairment tests on our goodwill and other intangible assets annually or at any time when events occur that could impact the value of our business segments. Our determination of whether impairment has occurred is based on a comparison of each of our reporting units’ fair market value with its carrying value.
We depend upon the availability of credit to operate our business, including the financing of receivables from end-user customers that are originated by our financial services businesses. Our end-user customers, franchisees and suppliers also require access to credit for their businesses. At times, world financial markets have been unstable and subject to uncertainty.
Our end-user customers, franchisees and suppliers also require access to credit for their businesses. At times, world financial markets have been unstable and subject to uncertainty.
Failure to maintain effective distribution of products and services could adversely impact revenue, gross margin and profitability. We use a variety of distribution methods to sell our products and services. Successfully managing the interaction of our distribution efforts to reach various potential customer segments for our products and services is a complex process.
Successfully managing the interaction of our distribution efforts to reach various potential customer segments for our products and services is a complex process.
The current focus on these matters is expected to result in additional and/or more restrictive regulations, requirements and/or industry or third-party standards to reduce or mitigate global warming and other environmental or sustainability risks, though the timing is uncertain.
The current focus on these matters is expected to result in additional and/or more restrictive regulations, such as the Corporate Sustainability Reporting Directive (CSRD) in the European Union and the proposed SEC regulations relating to climate change disclosures, and industry or third-party requirements and standards to reduce or mitigate climate change as well as other environmental or sustainability risks.
Adverse fluctuations in interest rates and/or our ability to provide competitive financing programs could also have an adverse impact on our revenue and profitability. Exposure to credit risks of customers and resellers may make it difficult to collect receivables, and our allowances for credit losses for receivables may prove inadequate, which could adversely affect operating results and financial condition.
Exposure to credit risks of customers and resellers may make it difficult to collect receivables, and our allowances for credit losses for receivables may prove inadequate, which could adversely affec t our operating results and financial condition.
In addition, we may incur costs related to remedial efforts or alleged environmental damage associated with past or current waste disposal practices. We cannot provide assurance that our costs of complying with current or future environmental protection and health and safety laws will not exceed our estimates.
In addition, we may incur costs related to remedial efforts or alleged environmental damage associated with past or current waste disposal practices.
The inability to successfully defend claims from taxing authorities and changes in tax laws and rules could adversely affect our financial condition, results of operations and cash flows. We conduct business in many countries, which requires us to interpret the income tax laws and rulings in each of those taxing jurisdictions.
We conduct business in many countries, which requires us to interpret the income tax laws and rulings in each of those taxing jurisdictions.
In addition to the specific risks above, we, our franchisees and our customers, may be adversely affected by changing economic conditions, including conditions that may particularly impact specific regions. These conditions may result in reduced consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits, and reduced business and consumer spending.
General Risk Factor Economic conditions and world events could affect our operating results. In addition to the specific risks above, we, our franchisees and our customers, may be adversely affected by changing economic conditions, including conditions that may particularly impact specific regions.
To meet Snap-on’s high quality standards, our steel needs range from specialized alloys, which are available only from a limited group of approved suppliers, to common alloys, which are available from multiple suppliers. Some of these materials have been, and in the future may be, in short supply, particularly in the event of mill shutdowns or production cut backs.
Some of these specialized materials and components have been, and in the future may be, in short supply, particularly in the event of mill shutdowns or production cut backs.
As part of the agreement between the U.K. and the European Union regarding Brexit, there is a new series of customs and regulatory checks, including rules of origin and stringent local content requirements. There are also restrictions on the free movement of people and temporary visas for work-related purposes have been re-introduced.
There are also restrictions on the free movement of people and temporary visas for work-related purposes have been re-introduced.
Cash generated in certain non-U.S. jurisdictions may be difficult to repatriate to the United States in a tax-efficient manner. Adverse developments in the credit and financial markets could negatively impact the availability of credit that we and our customers need to operate our businesses.
Adverse developments in the credit and financial markets could negatively impact the availability of credit that we and our customers need to operate our businesses. We depend upon the availability of credit to operate our business, including the financing of receivables from end-user customers that are originated by our financial services businesses.
Removed
If our franchisees are not successful, or if we do not maintain an effective relationship with our franchisees, the delivery of products, the collection of receivables and/or our relationship with end users could be adversely affected and thereby negatively impact our business, financial condition, results of operations and cash flows.
Added
In addition, technological developments and enhancements of products and service offerings in our industry may require our expanded use of artificial intelligence (“AI”) and machine learning; if we are unable to keep pace with the rate of these and other developments, our ability to effectively compete could be adversely affected.
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Failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business. The global tool, equipment, diagnostics, and repair information industries are competitive. We face strong competition in all of our market segments.
Added
These include political, economic and social instability, such as acts of war, armed conflicts, civil disturbance or acts of terrorism, local labor conditions, and trade relations with China.
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The company continued to pursue its commercial activities and restored connections as system interfaces were cleared.
Added
Price inflation and shortages of raw materials, components, certain purchased finished goods and energy sources have impacted, and in the future could adversely affect, the ability to obtain, as well as the cost of, needed materials or products and, in turn, our results of operations.
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The maximum available credit under our multi-currency revolving credit facility is $800 million.
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To meet Snap-on’s high quality standards, a portion of our steel needs include specialized alloys, which are available only from a limited group of approved suppliers. Additionally, certain electronic components are sourced from a finite set of suppliers.
Removed
Risk related to COVID-19 and Other Infectious Diseases The ongoing COVID-19 pandemic continues to pose risks to our business, results of operations, financial condition and cash flows, and other epidemics or outbreaks of infectious diseases may have a similar impact. We face risks related to outbreaks of infectious diseases, including the ongoing COVID-19 pandemic.
Added
Higher prices also may reduce the level of future customer orders and our profitability. 2023 ANNUAL REPORT 15 Failure to maintain effective distribution of products and services could adversely impact revenue, gross margin and profitability. We use a variety of distribution methods to sell our products and services.
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In response to COVID-19 and its variants, national and local governments around the world have instituted certain protective measures at various times. While such restrictions have generally eased in many countries where we have operations, existing measures may be extended in certain regions and additional measures may be imposed to combat the COVID-19 pandemic or future outbreaks of infectious diseases.
Added
Data security and information technology infrastructure and security are critical to supporting business objectives; failure of our systems, as well as those of third parties with which we do business, to operate effectively could adversely affect our business and reputation.
Removed
The effects of COVID-19 or other similar outbreaks on the company could include reduced consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits, supply chain inefficiencies, and reduced business and consumer spending, which could adversely affect our results of operations by reducing our sales, margins and/or net income as a result of rising costs, a slowdown in customer orders or order cancellations.
Added
The company continued to pursue its commercial activities and restored connections as system interfaces were cleared. This incident did not have a significant impact on the results of our operations, and we are not currently aware of a security breach at any third-party service provider that we believe could significantly affect our operations.
Removed
To the extent the ongoing COVID-19 pandemic, or a future outbreak of an infectious disease, adversely affects our business, financial condition, results of operations and cash flows, it may also heighten many of the other risks described in this section. 2022 ANNUAL REPORT 21 General Risk Factor Economic conditions and world events could affect our operating results.
Added
Adverse fluctuations in interest rates and/or our ability to provide competitive financing programs could also have an adverse impact on our revenue and profitability.
Added
Cash generated in certain non-U.S. jurisdictions has been, and in the future may be, difficult to repatriate to the United States in a tax-efficient manner as a result of, among other factors, restrictions on the movement of funds out of certain countries put in place by foreign governments.
Added
Further, economic conditions in the markets in which we operate can vary, including due to changes in currency exchange rates, local inflation, interest rates and other factors, which could adversely affect our business, financial condition, results of operations and cash flows.
Added
Our $900 million multicurrency revolving credit facility contains an accordion feature that, subject to certain customary conditions, may allow the maximum commitment to be increased by up to $450 million with the approval of the lenders providing additional commitments.
Added
We cannot provide assurance that our costs of complying with current or future environmental protection and health and safety laws will not exceed our estimates. 20 SNAP-ON INCORPORATED The inability to successfully defend claims from taxing authorities and changes in tax laws and rules could adversely affect our financial condition, results of operations and cash flows.
Added
New tax laws, within the U.S. and the other jurisdictions in which we operate, such as Pillar Two of the Global Anti-Base Erosion Rules released by the Organisation for Economic Cooperation and Development (OECD), which, once adopted in various jurisdictions, will require a global minimum tax for multinational countries, could impact our operations.
Added
These conditions may result in reduced consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits, and reduced business and consumer spending.

Item 2. Properties

Properties — owned and leased real estate

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Locations: Elkmont, Alabama Manufacturing Owned SOT Conway, Arkansas Manufacturing and distribution Owned and leased RS&I City of Industry, California Manufacturing Leased C&I San Diego, California Software development Owned RS&I San Jose, California Software development Leased RS&I Tustin, California Manufacturing and distribution Leased C&I Columbus, Georgia Distribution Owned C&I Crystal Lake, Illinois Distribution Owned and leased SOT Libertyville, Illinois Financial services Leased FS Algona, Iowa Manufacturing and distribution Owned SOT Louisville, Kentucky Manufacturing and distribution Leased RS&I Olive Branch, Mississippi Distribution Owned SOT Carson City, Nevada Distribution Owned and leased SOT Murphy, North Carolina Manufacturing and distribution Owned and leased C&I Richfield, Ohio Software development Owned RS&I Robesonia, Pennsylvania Distribution Owned SOT Elizabethton, Tennessee Manufacturing Owned SOT Kenosha, Wisconsin Distribution and corporate Owned SOT, C&I, RS&I Milwaukee, Wisconsin Manufacturing Owned SOT Pleasant Prairie, Wisconsin Distribution Owned SOT, C&I, RS&I Non-U.S.
Locations: Elkmont, Alabama Manufacturing Owned SOT Conway, Arkansas Manufacturing and distribution Owned and leased RS&I City of Industry, California Manufacturing Leased C&I San Diego, California Software development Owned RS&I San Jose, California Software development Leased RS&I Tustin, California Manufacturing and distribution Leased C&I Columbus, Georgia Distribution Owned C&I Crystal Lake, Illinois Distribution Owned and leased SOT Libertyville, Illinois Financial services Leased FS Lincolnshire, Illinois Software development Owned RS&I Algona, Iowa Manufacturing and distribution Owned SOT Louisville, Kentucky Manufacturing and distribution Leased RS&I Olive Branch, Mississippi Distribution Owned SOT Carson City, Nevada Distribution Owned and leased SOT Murphy, North Carolina Manufacturing and distribution Owned and leased C&I Richfield, Ohio Software development Owned RS&I Robesonia, Pennsylvania Distribution Owned SOT Elizabethton, Tennessee Manufacturing Owned SOT Kenosha, Wisconsin Distribution and corporate Owned SOT, C&I, RS&I Milwaukee, Wisconsin Manufacturing Owned SOT Pleasant Prairie, Wisconsin Distribution Owned SOT, C&I, RS&I Non-U.S.
Snap-on’s facilities in the United States occupy approximately 4.1 million square feet, of which 73% is owned, including its corporate and general office facility located in Kenosha, Wisconsin. Snap-on’s facilities outside the United States occupy approximately 4.4 million square feet, of which approximately 73% is owned. Certain Snap-on facilities are leased through operating and finance lease agreements.
Snap-on’s facilities in the United States occupy approximately 4.3 million square feet, of which 71% is owned, including its corporate and general office facility located in Kenosha, Wisconsin. Snap-on’s facilities outside the United States occupy approximately 4.4 million square feet, of which approximately 73% is owned. Certain Snap-on facilities are leased through operating and finance lease agreements.
Locations: Santo Tome, Argentina Manufacturing Owned C&I New South Wales, Australia Distribution and financial services Leased SOT, FS Minsk, Belarus Manufacturing Owned C&I Santa Bárbara d’Oeste, Brazil Manufacturing and distribution Owned RS&I Calgary, Canada Distribution Leased SOT Mississauga, Canada Distribution Leased SOT, RS&I Beijing, China Manufacturing and distribution Leased C&I Kunshan, China Manufacturing Owned C&I Xiaoshan, China Manufacturing Owned C&I Banbury, England Manufacturing and distribution Owned C&I Bramley, England Manufacturing Owned C&I Kettering, England Distribution and financial services Owned and leased SOT, C&I, FS Bauge-en-Anjou, France Manufacturing Owned C&I Sopron, Hungary Manufacturing Owned RS&I Correggio, Italy Manufacturing Owned RS&I Tokyo, Japan Distribution Leased C&I Helmond, Netherlands Distribution Owned C&I Vila do Conde, Portugal Manufacturing Owned C&I Irun, Spain Manufacturing Owned C&I Placencia, Spain Manufacturing Owned C&I Vitoria, Spain Manufacturing and distribution Owned C&I Edsbyn, Sweden Manufacturing Owned C&I Kungsör, Sweden Manufacturing and distribution Owned RS&I Lidköping, Sweden Manufacturing Owned C&I * Segment abbreviations: C&I – Commercial & Industrial Group SOT – Snap-on Tools Group RS&I – Repair Systems & Information Group FS – Financial Services 2022 ANNUAL REPORT 23
Locations: Santo Tome, Argentina Manufacturing Owned C&I New South Wales, Australia Distribution and financial services Leased SOT, FS Minsk, Belarus Manufacturing Owned C&I Santa Bárbara d’Oeste, Brazil Manufacturing and distribution Owned RS&I Calgary, Canada Distribution Leased SOT Mississauga, Canada Distribution Leased SOT, RS&I Beijing, China Manufacturing and distribution Leased C&I Kunshan, China Manufacturing Owned C&I Xiaoshan, China Manufacturing Owned C&I Banbury, England Manufacturing and distribution Owned C&I Bramley, England Manufacturing Owned C&I Kettering, England Distribution and financial services Owned and leased SOT, C&I, FS Bauge-en-Anjou, France Manufacturing Owned C&I Sopron, Hungary Manufacturing Owned RS&I Correggio, Italy Manufacturing Owned RS&I Tokyo, Japan Distribution Leased C&I Helmond, Netherlands Distribution Owned C&I Vila do Conde, Portugal Manufacturing Owned C&I Irun, Spain Manufacturing Owned C&I Placencia, Spain Manufacturing Owned C&I Vitoria, Spain Manufacturing and distribution Owned C&I Edsbyn, Sweden Manufacturing Owned C&I Kungsör, Sweden Manufacturing and distribution Owned RS&I Lidköping, Sweden Manufacturing Owned C&I * Segment abbreviations: C&I – Commercial & Industrial Group SOT – Snap-on Tools Group RS&I – Repair Systems & Information Group FS – Financial Services 24 SNAP-ON INCORPORATED
Snap-on management continually monitors the company’s capacity needs and makes adjustments as dictated by market and other conditions. 22 SNAP-ON INCORPORATED The following table provides information about our corporate headquarters and financial services operations, and each of Snap-on’s principal active manufacturing locations, distribution centers and software development locations (exceeding 50,000 square feet) as of 2022 year end: Location Principal Property Use Owned/Leased Segment* U.S.
Snap-on management continually monitors the company’s capacity needs and makes adjustments as dictated by market and other conditions. 2023 ANNUAL REPORT 23 The following table provides information about our corporate headquarters and financial services operations, and each of Snap-on’s principal active manufacturing locations, distribution centers and software development locations (exceeding 50,000 square feet) as of 2023 year end: Location Principal Property Use Owned/Leased Segment* U.S.
See Note 17 to the Consolidated Financial Statements for information on the company’s operating and finance leases.
See Note 16 to the Consolidated Financial Statements for information on the company’s operating and finance leases.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Issuer Purchases of Equity Securities The following chart discloses information regarding the shares of Snap-on’s common stock repurchased by the company during the fourth quarter of fiscal 2022, all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.
Issuer Purchases of Equity Securities The following chart discloses information regarding the shares of Snap-on’s common stock repurchased by the company during the fourth quarter of fiscal 2023, all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Snap-on had 53,002,580 shares of common stock outstanding as of 2022 year end. Snap-on’s stock is listed on the New York Stock Exchange under the ticker symbol “SNA.” At February 3, 2023, there were 4,113 registered holders of Snap-on common stock.
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Snap-on had 52,694,017 shares of common stock outstanding as of 2023 year end. Snap-on’s stock is listed on the New York Stock Exchange under the ticker symbol “SNA.” At February 9, 2024, there were 3,992 registered holders of Snap-on common stock.
The company’s stock-based deferred compensation liabilities, which are impacted by changes in the company’s stock price, increase as the company’s stock price rises and decrease as the company’s stock price declines. Pursuant to the Agreement, Citibank may purchase or sell shares of the company’s common stock (for Citibank’s account) in the market or in privately negotiated transactions.
The company’s stock-based deferred compensation liabilities increase as the company’s stock price rises and decrease as the company’s stock price declines. Pursuant to the Agreement, the counterparty may purchase or sell shares of the company’s common stock for its account in the market or in privately negotiated transactions.
Period Shares purchased Average price per share Shares purchased as part of publicly announced plans or programs Approximate value of shares that may yet be purchased under publicly announced plans or programs* 10/02/22 to 10/29/22 50,000 $216.45 50,000 $385.6 million 10/30/22 to 11/26/22 87,000 $231.48 87,000 $387.6 million 11/27/22 to 12/31/22 147,000 $233.07 147,000 $362.4 million Total/Average 284,000 $229.66 284,000 N/A ______________________ N/A: Not applicable * Subject to further adjustment pursuant to the 1996 Authorization described below, as of December 31, 2022, the approximate value of shares that may yet be purchased pursuant to the outstanding Board authorizations discussed below is $362.4 million. • In 1996, the Board authorized the company to repurchase shares of the company’s common stock periodically in the open market or in privately negotiated transactions (“the 1996 Authorization”).
Period Shares purchased Average price per share Shares purchased as part of publicly announced plans or programs Approximate value of shares that may yet be purchased under publicly announced plans or programs* 10/01/23 to 10/28/23 32,000 $252.77 32,000 $296.3 million 10/29/23 to 11/25/23 86,000 $268.43 86,000 $275.2 million 11/26/23 to 12/30/23 99,000 $282.48 99,000 $282.9 million Total/Average 217,000 $272.53 217,000 N/A N/A: Not applicable * Subject to further adjustment pursuant to the 1996 Authorization described below, as of December 30, 2023, the approximate value of shares that may yet be purchased pursuant to the outstanding Board authorizations discussed below is $282.9 million. • In 1996, the Board authorized the company to repurchase shares of the company’s common stock periodically in the open market or in privately negotiated transactions (“the 1996 Authorization”).
The Agreement has no stated expiration date and does not provide for Snap-on to purchase or repurchase its shares.
At termination, the Agreement settles in cash and does not provide for Snap-on to purchase or repurchase its shares.
Citibank Purchases (Sales) of Snap-on Stock Period Shares Purchased (Sold) Average Price per Share 10/02/22 to 10/29/22 — — 10/30/22 to 11/26/22 (6,400) $228.61 11/27/22 to 12/31/22 500 $235.45 Total/Average (5,900) $229.11 2022 ANNUAL REPORT 25 Five-year Stock Performance Graph The graph below illustrates the cumulative total shareholder return on Snap-on common stock since December 31, 2017, of a $100 investment, assuming that dividends were reinvested quarterly.
Period Shares Purchased (Sold) Average Price per Share 10/01/23 to 10/28/23 — — 10/29/23 to 11/25/23 (1,000) $252.03 11/26/23 to 12/30/23 500 $279.25 Total/Average (500) $261.10 26 SNAP-ON INCORPORATED Five-year Stock Performance Graph The graph below illustrates the cumulative total shareholder return on Snap-on common stock since December 31, 2018, of a $100 investment, assuming that dividends were reinvested quarterly.
The 2021 Authorization will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board. 24 SNAP-ON INCORPORATED Other Purchases or Sales of Equity Securities The following chart discloses information regarding transactions in shares of Snap-on’s common stock by Citibank, N.A.
The 2021 Authorization will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board. 2023 ANNUAL REPORT 25 Other Purchases or Sales of Equity Securities The following chart discloses information regarding transactions by a counterparty in shares of Snap-on’s common stock during the fourth quarter of fiscal 2023 pursuant to a prepaid equity forward agreement (the “Agreement”) that is intended to reduce the impact of market risk associated with the stock-based portion of the company’s deferred compensation plans.
Fiscal Year Ended (1) Snap-on Incorporated S&P 500 Industrials S&P 500 December 31, 2017 $100.00 $100.00 $100.00 December 31, 2018 $85.15 $86.71 $95.62 December 31, 2019 $101.79 $112.17 $125.72 December 31, 2020 $105.86 $124.59 $148.85 December 31, 2021 $136.40 $150.89 $191.58 December 31, 2022 $148.55 $142.63 $156.89 _______________________________ (1) The company’s fiscal year ends on the Saturday that is on or nearest to December 31 of each year; for ease of calculation, the fiscal year end is assumed to be December 31.
Fiscal Year Ended (1) Snap-on Incorporated S&P 500 Industrials S&P 500 December 31, 2018 $100.00 $100.00 $100.00 December 31, 2019 $119.54 $129.37 $131.49 December 31, 2020 $124.33 $143.68 $155.68 December 31, 2021 $160.19 $174.02 $200.37 December 31, 2022 $174.47 $164.49 $164.08 December 31, 2023 $226.27 $194.31 $207.21 (1) The company’s fiscal year ends on the Saturday that is on or nearest to December 31 of each year; for ease of calculation, the fiscal year end is assumed to be December 31.
Removed
(“Citibank”) during the fourth quarter of 2022 pursuant to a prepaid equity forward agreement (the “Agreement”) with Citibank that is intended to reduce the impact of market risk associated with the stock-based portion of the company’s deferred compensation plans.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Significant estimates used by management in the discounted cash flows methodology include estimates of future cash flows based on expected growth rates, price increases, working capital levels, expected benefits from RCI initiatives, and a weighted-average cost of capital that reflects the specific risk profile of the reporting unit being tested.
Significant estimates used by management in the discounted cash flows methodology include estimates of future cash flows based on expected growth rates, price increases, working capital levels, expected benefits from RCI initiatives, and a weighted-average cost of capital that reflects the risk profile of the reporting unit being tested.
Financial Services intends to focus on the following strategic priorities in 2023: • Delivering financial products and services that attract and sustain profitable franchisees and support Snap‑on’s strategies for expanding market coverage and penetration; • Improving productivity levels and ensuring high quality in all financial products and processes through the use of RCI initiatives; and • Maintaining healthy portfolio performance levels.
Financial Services intends to focus on the following strategic priorities in 2024: • Delivering financial products and services that attract and sustain profitable franchisees and support Snap‑on’s strategies for expanding market coverage and penetration; • Improving productivity levels and ensuring high quality in all financial products and processes through the use of RCI initiatives; and • Maintaining healthy portfolio performance levels.
The company’s methodologies for valuing goodwill are applied consistently on a year-over-year basis; the assumptions used in performing the second quarter 2022 impairment calculations were evaluated in light of then-current market and business conditions.
The company’s methodologies for valuing goodwill are applied consistently on a year-over-year basis; the assumptions used in performing the second quarter 2023 impairment calculations were evaluated in light of then-current market and business conditions.
The Commercial & Industrial Group intends to continue building on the following strategic priorities in 2023: • Expanding our business with existing customers and reaching new customers in critical industries and other market segments; • Continuing to invest in emerging market growth initiatives; • Broadening our product offering designed particularly for critical industry segments; • Increasing our customer-connection-driven understanding of work across multiple industries; • Investing in innovation that, guided by that understanding of work, delivers an ongoing stream of productivity-enhancing custom engineered solutions; and • Continuing to reduce structural and operating costs, as well as improve efficiencies, through RCI initiatives.
The Commercial & Industrial Group intends to focus on the following strategic priorities in 2024: • Expanding our business with existing customers and reaching new customers in critical industries and other market segments; • Continuing to invest in emerging market growth initiatives; • Broadening our product offering designed particularly for critical industry segments; • Increasing our customer-connection-driven understanding of work across multiple industries; • Investing in innovation that, guided by that understanding of work, delivers an ongoing stream of productivity-enhancing custom engineered solutions; and • Continuing to reduce structural and operating costs, as well as improve efficiencies, through RCI initiatives.
The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s multi-national mobile tool distribution channel. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM dealerships, through direct and distributor channels.
The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s multinational mobile tool distribution channel. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM dealerships, through direct and distributor channels.
In 2022, the long-term investment performance objective for Snap-on’s domestic plans’ assets was to achieve net of expense returns that met or exceeded the 6.5% domestic expected return on plan assets assumption. Snap-on uses a three-year, market-related value asset method of amortizing the difference between actual and expected returns on its domestic plans’ assets.
In 2023, the long-term investment performance objective for Snap-on’s domestic plans’ assets was to achieve net of expense returns that met or exceeded the 7.5% domestic expected return on plan assets assumption. Snap-on uses a three-year, market-related value asset method of amortizing the difference between actual and expected returns on its domestic plans’ assets.
Due to Snap-on’s credit rating over the years, external funds have been available at an acceptable cost. As of February 3, 2023, Snap-on’s long-term debt and commercial paper were rated, respectively, A2 and P-1 by Moody’s Investors Service; A- and A-2 by Standard & Poor’s; and A and F1 by Fitch Ratings.
Due to Snap-on’s credit rating over the years, external funds have been available at an acceptable cost. As of February 9, 2024, Snap-on’s long-term debt and commercial paper were rated, respectively: A2 and P-1 by Moody’s Investors Service; A- and A-2 by Standard & Poor’s; and A and F1 by Fitch Ratings.
Based on the company’s second quarter 2022 impairment testing, and assuming a hypothetical 10% decrease in the estimated fair values of each of its 11 reporting units, the hypothetical fair value of each of the company’s 11 reporting units would have been greater than its carrying value. See Note 7 to the Consolidated Financial Statements for further information about goodwill.
Based on the company’s second quarter 2023 impairment testing, and assuming a hypothetical 10% decrease in the estimated fair values of each of its 11 reporting units, the hypothetical fair value of each of the company’s 11 reporting units would have been greater than its carrying value. See Note 7 to the Consolidated Financial Statements for additional information about goodwill.
As of 2022 year end, Snap-on was in compliance with all covenants of its Credit Facility and other debt agreements. 44 SNAP-ON INCORPORATED Snap-on believes it has sufficient available cash and access to both committed and uncommitted credit facilities to cover its expected funding needs on both a short-term and long-term basis.
As of 2023 year end, Snap-on was in compliance with all covenants of its Credit Facility and other debt agreements. Snap-on believes it has sufficient available cash and access to both committed and uncommitted credit facilities to cover its expected funding needs on both a short-term and long-term basis.
Contractual Obligations and Commitments Snap-on’s contractual obligations for long-term debt and operating and finance leases are reflected in the Consolidated Balance Sheets; see Note 10 and Note 17 to the Consolidated Financial Statements for information on the company’s long-term debt and leases. Snap-on also enters into contracts for future purchases in the normal course of business.
Contractual Obligations and Commitments Snap-on’s contractual obligations for long-term debt and operating and finance leases are reflected in the Consolidated Balance Sheets; see Note 9 and Note 16 to the Consolidated Financial Statements for information on the company’s long-term debt and leases. Snap-on also enters into contracts for future purchases in the normal course of business.
Lowering the expected rate of return assumption for Snap-on’s domestic pension plans’ assets by 50 bps would have increased Snap-on’s 2022 domestic pension expense by approximately $6.8 million. The objective of Snap-on’s discount rate assumption is to reflect the rate at which the pension benefits could be effectively settled.
Lowering the expected rate of return assumption for Snap-on’s domestic pension plans’ assets by 50 bps would have increased Snap-on’s 2023 domestic pension expense by approximately $6.2 million. The objective of Snap-on’s discount rate assumption is to reflect the rate at which the pension benefits could be effectively settled.
Operating margin for the Snap‑on Tools Group of 21.4% in the quarter compared to 21.9% last year.
Operating margin for the Snap‑on Tools Group of 21.6% in the quarter compared to 21.4% last year.
Pro forma financial information has not been presented for any of these acquisitions as the net effects, individually and collectively, were neither significant nor material to Snap-on’s results of operations or financial position. Fiscal Year Snap-on’s fiscal year ends on the Saturday that is on or nearest to December 31.
Pro forma financial information has not been presented for these acquisitions as t he net effects, individually and collectively, were neither significant nor material to Snap-on’s results of operations or financial position. 28 SNAP-ON INCORPORATED Fiscal Year Snap-on’s fiscal year ends on the Saturday that is on or nearest to December 31.
To determine the 2023 net periodic benefit cost, Snap-on is using weighted-average discount rates for its domestic and foreign pension plans of 5.5% and 4.8%, respectively, and an expected return on plan assets for its domestic pension plans of 7.5%. The expected returns on plan assets for foreign pension plans ranged from 2.2% to 6.9% as of 2022 year end.
To determine the 2024 net periodic benefit cost, Snap-on is using weighted-average discount rates for its domestic and foreign pension plans of 5.5% and 4.3%, respectively, and an expected return on plan assets for its domestic pension plans of 7.5%. The expected returns on plan assets for foreign pension plans ranged from 2.2% to 6.7% as of 2023 year end.
In 2023, despite the uncertainties, Snap-on expects to make continued progress along its defined runways for coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high.
In 2024, Snap-on expects to make ongoing progress along its defined runways for coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high.
Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to fund the company’s additional share repurchases, if any. Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. Cash dividends paid in 2022 and 2021 totaled $313.1 million and $275.8 million, respectively.
Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to fund the company’s additional share repurchases, if any. Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. Cash dividends paid in 2023 and 2022 totaled $355.6 million and $313.1 million, respectively.
Depending on market and other conditions, Snap-on may make additional discretionary cash contributions to its pension plans in 2023; see Note 12 and Note 13 to the Consolidated Financial Statements for information on the company’s benefit plans and payments.
Depending on market and other conditions, Snap-on may make additional discretionary cash contributions to its pension plans in 2024; see Note 11 and Note 12 to the Consolidated Financial Statements for information on the company’s benefit plans and payments.
Our strategic priorities and plans for 2023 involve continuing to build on our Snap-on Value Creation Processes – our suite of strategic principles and processes we employ every day designed to create value, and employed in the areas of safety, quality, customer connection, innovation and rapid continuous improvement (“Rapid Continuous Improvement” or “RCI”).
Our strategic priorities and plans for 2024 involve continuing to build on our Snap-on Value Creation Processes – our suite of strategic principles and processes we employ every day designed to create value, and employed in the areas of safety, quality, customer connection, innovation and Rapid Continuous Improvement (“RCI”).
Transactions between the Operations and Financial Services businesses were eliminated to arrive at the Consolidated Financial Statements.
Transactions between the Operations and Financial Services businesses are eliminated to arrive at the Consolidated Financial Statements.
Days sales outstanding (trade and other accounts receivable – net as of the respective period end, divided by the respective trailing 12 months sales, times 360 days) was 61 days and 58 days at the respective 2022 and 2021 year ends.
Days sales outstanding (trade and other accounts receivable – net as of the respective period end, divided by the respective trailing 12 months sales, times 360 days) was 60 days and 61 days at the respective 2023 and 2022 year ends.
As of 2022 and 2021 year end, inventory turns (trailing 12 months of cost of goods sold, divided by the average of the beginning and ending inventory balance for the trailing 12 months) were 2.5 turns and 2.8 turns, respectively.
As of 2023 and 2022 year end, inventory turns (trailing 12 months of cost of goods sold, divided by the average of the beginning and ending inventory balance for the trailing 12 months) were 2.3 turns and 2.5 turns, respectively.
The weighted-average discount rate for Snap-on’s foreign pension plans of 4.8% (compared to 2.0% as of 2021 year end) represents the single rate that produces the same present value of cash flows as the estimated benefit plan payments.
The weighted-average discount rate for Snap-on’s foreign pension plans of 4.3% (compared to 4.8% as of 2022 year end) represents the single rate that produces the same present value of cash flows as the estimated benefit plan payments.
Quarterly dividends in 2021 were $1.42 per share in the fourth quarter and $1.23 per share in the first three quarters ($5.11 per share for the year). 2022 2021 Cash dividends paid per common share $ 5.88 $ 5.11 Cash dividends paid as a percentage of prior-year retained earnings 5.5 % 5.3 % Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to pay dividends in 2023.
Quarterly dividends in 2022 were $1.62 per share in the fourth quarter and $1.42 per share in the first three quarters ($5.88 per share for the year). 2023 2022 Cash dividends paid per common share $ 6.72 $ 5.88 Cash dividends paid as a percentage of prior-year retained earnings 5.6 % 5.5 % Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to pay dividends in 2024.
For reference, a 100 bps increase in the allowance ratios for finance receivables as of December 31, 2022, would have increased Snap-on’s 2022 provision for credit losses and related allowance for credit losses by approximately $17.9 million. For additional information on Snap-on’s allowances for credit losses, see Note 1 and Note 4 to the Consolidated Financial Statements.
For reference, a 100 bps increase in the allowance ratios for finance receivables as of December 30, 2023, would have increased Snap-on’s 2023 provision for credit losses and related allowance for credit losses by approximately $19.4 million. For additional information on Snap-on’s allowances for credit losses, see Note 1 and Note 4 to the Consolidated Financial Statements.
As of December 31, 2022, the company’s actual ratios of 0.09 and 0.37 respectively, were both within the permitted ranges set forth in this financial covenant. Snap-on generally issues commercial paper to fund its financing needs on a short-term basis and uses the Credit Facility as back-up liquidity to support such commercial paper issuances.
As of December 30, 2023, the company’s actual ratios of 0.05 and 0.18 respectively, were both within the permitted ranges set forth in this financial covenant. Snap-on generally issues commercial paper to fund its financing needs on a short-term basis and uses the Credit Facility as back-up liquidity to support such commercial paper issuances.
See Note 1 and Note 4 to the Consolidated Financial Statements for further information on financial services. 2022 ANNUAL REPORT 39 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Corporate Snap-on’s fourth quarter 2022 general corporate expenses of $26.6 million compared to $25.6 million last year.
See Note 1 and Note 4 to the Consolidated Financial Statements for additional information on financial services. 2023 ANNUAL REPORT 39 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Corporate Snap-on’s fourth quarter 2023 general corporate expenses of $20.5 million compared to $26.6 million last year.
Should the operations of the businesses with which goodwill is associated incur significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to long-term deterioration in macroeconomic, industry and market conditions, the loss of key customers, changes in technology or markets, changes in key personnel or litigation, a sustained decrease in share price and/or other events, some or all of the recorded goodwill could be subject to impairment and could result in a material adverse effect on Snap-on’s financial position or results of operations. 48 SNAP-ON INCORPORATED Snap-on completed its annual impairment testing of goodwill in the second quarter of 2022, which did not result in any impairment.
Should the operations of the businesses with which goodwill is associated incur significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to long-term deterioration in macroeconomic, industry and market conditions, the loss of key customers, changes in technology or markets, changes in key personnel or litigation, a sustained decrease in share price and/or other events, some or all of the recorded goodwill could be subject to impairment and could result in a material adverse effect on Snap-on’s financial position or results of operations.
Of the $757.2 million of cash and cash equivalents as of 2022 year end, $244.1 million was held outside of the United States. Snap-on maintains non-U.S. funds in its foreign operations to: (i) provide adequate working capital; (ii) satisfy various regulatory requirements; and/or (iii) take advantage of business expansion opportunities as they arise.
Of the $1,001.5 million of cash and cash equivalents as of 2023 year end, $394.9 million was held outside of the United States. Snap-on maintains non-U.S. funds in its foreign operations to: (i) provide adequate working capital; (ii) satisfy various regulatory requirements; and/or (iii) take advantage of business expansion opportunities as they arise.
See Note 18 to the Consolidated Financial Statements for information on other income (expense) – net. 2022 ANNUAL REPORT 37 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) The effective income tax rate on earnings attributable to Snap-on was 22.0% in the fourth quarter of 2022 and 22.3% in the fourth quarter of 2021.
See Note 17 to the Consolidated Financial Statements for additional information on Other income (expense) – net. 2023 ANNUAL REPORT 37 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) The effective income tax rate on earnings attributable to Snap-on in the fourth quarter was 21.4% in 2023 and 22.0% in 2022.
Long-term debt of $1,183.8 million as of 2022 year end consisted of: (i) $300.0 million of unsecured 3.25% notes that mature on March 1, 2027 (the “2027 Notes”); (ii) $400.0 million of unsecured 4.10% notes that mature on March 1, 2048 (“the 2048 Notes”); and (iii) $500.0 million of 3.10% notes that mature on May 1, 2050 (the “2050 Notes”), partially offset by $16.2 million of unamortized debt issuance costs.
Long-term debt of $1,184.6 million as of 2023 year end consisted of: (i) $300.0 million of unsecured 3.25% notes that mature on March 1, 2027 (the “2027 Notes”); (ii) $400.0 million of unsecured 4.10% notes that mature on March 1, 2048 (“the 2048 Notes”); and (iii) $500.0 million of 3.10% notes that mature on May 1, 2050 (the “2050 Notes”), partially offset by $15.4 million of unamortized debt issuance costs and issuance discounts.
Lowering Snap-on’s domestic discount rate assumption by 50 bps would have increased Snap-on’s 2022 domestic pension expense and projected benefit obligation by approximately $4.5 million and $48.6 million, respectively. As of 2022 year end, Snap-on’s domestic projected benefit obligation comprised approximately 85% of Snap-on’s worldwide projected benefit obligation.
Lowering Snap-on’s domestic discount rate assumption by 50 bps would have increased Snap-on’s 2023 domestic pension expense and projected benefit obligation by approximately $1.5 million and $48.1 million, respectively. As of 2023 year end, Snap-on’s domestic projected benefit obligation comprised approximately 84% of Snap-on’s worldwide projected benefit obligation.
In 2023, the Snap-on Tools Group intends to continue its expansion with specific focus on the following initiatives: • Continuing to improve franchisee sales productivity, profitability, commercial health, and satisfaction; • Developing new programs and products to expand market coverage, reaching new technician customers and increasing penetration with existing customers; • Increasing investment in new product innovation and development; and • Improving customer service levels and productivity in back office support functions, manufacturing and the supply chain through RCI initiatives and investment.
The Snap-on Tools Group intends to focus on the following strategic priorities in 2024: • Enhancing franchisee sales productivity, profitability, commercial health, and satisfaction; • Developing new programs and products to expand market coverage, reaching new technician customers and increasing penetration with existing customers; • Increasing investment in new product innovation and development; and • Improving customer service levels and productivity in back office support functions, manufacturing and the supply chain through RCI initiatives and capacity investment.
Inventories accounted for using the first-in, first-out (“FIFO”) method as of 2022 and 2021 year end approximated 61% and 60% of total inventories, respectively. All other inventories are accounted for using the last-in, first-out (“LIFO”) method. The company’s LIFO reserve was $108.6 million and $87.2 million at 2022 and 2021 year end, respectively.
Inventories accounted for using the first-in, first-out (“FIFO”) method as of 2023 and 2022 year end approximated 59% and 61% of total inventories, respectively. All other inventories are accounted for using the last-in, first-out (“LIFO”) method. The company’s LIFO reserve was $115.9 million and $108.6 million at 2023 and 2022 year end, respectively.
Throughout the turbulence, we maintained and further extended our ongoing advantages in our products, brands and people. At the same time, we leveraged existing proficiencies to focus on expanding our professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including critical industries, where the cost and penalties for failure can be high.
At the same time, we leveraged existing proficiencies to focus on expanding our professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including critical industries, where the cost and penalties for failure can be high.
There was no commercial paper issued or outstanding during the year ended and as of December 31, 2022 or January 1, 2022. Snap-on’s Credit Facility and other debt agreements also contain certain usual and customary borrowing, affirmative, negative and maintenance covenants.
There was no commercial paper issued or outstanding during the years ended and as of December 30, 2023 or December 31, 2022. 44 SNAP-ON INCORPORATED Snap-on’s Credit Facility and other debt agreements also contain certain usual and customary borrowing, affirmative, negative and maintenance covenants.
Net cash used by investing activities of $206.2 million in 2022 included additions to finance receivables of $955.8 million, partially offset by collections of $826.9 million, as well as $0.5 million of cash provided by acquisitions.
Net cash used by investing activities of $206.2 million in 2022 included additions to finance receivables of $955.8 million, partially offset by collections of $826.9 million, as well as $0.5 million of cash provided by acquisitions. Capital expenditures in 2023 and 2022 totaled $95.0 million and $84.2 million, respectively.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations Management Overview We believe our 2022 operating performance demonstrates the continued momentum of our operations, confirms the resilience of our markets, and reflects the considerable capabilities of our experienced team to overcome the uncertainties of the current environment.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations Management Overview We believe our 2023 operating performance demonstrates the continuing momentum of our business, confirms the special resilience of our markets, and reflects the considerable capability of our combined operations and our experienced team to overcome the uncertainties of the current environment.
These expenses are generally more dependent on changes in the financial services portfolio than they are on the revenue of the segment. Financial services expenses in 2022 increased $6.0 million from last year primarily due to higher provisions for credit losses as compared to those recorded in 2021.
These expenses are generally more dependent on changes in the size of the financial services portfolio than they are on the revenue of the segment. Financial services expenses in 2023 increased primarily due to higher provisions for credit losses as compared to those recorded in 2022.
See Note 10 to the Consolidated Financial Statements for information on Snap-on’s debt and credit facilities. Other income (expense) – net includes net gains and losses associated with hedging and currency exchange rate transactions, non-service components of net periodic benefit costs, and interest income. See Note 18 to the Consolidated Financial Statements for information on other income (expense) – net.
See Note 9 to the Consolidated Financial Statements for additional information on debt and credit facilities. Other income (expense) – net primarily includes net gains and losses associate d with hedging and currency exchange rate transactions, non-service components of net periodic benefit costs, and interest income.
As of 2022 year end, Snap-on’s domestic pension plans’ assets comprised approximately 87% of the company’s worldwide pension plan assets. Based on forward-looking capital market expectations, Snap-on selected an expected return on plan assets assumption for its U.S. pension plans of 7.5%, an increase of 100 bps from 2022, to be used in determining pension expense for 2023.
As of 2023 year end, Snap-on’s domestic pension plans’ assets comprised approximately 86% of the company’s worldwide pension plan assets. 48 SNAP-ON INCORPORATED Based on forward-looking capital market expectations, Snap-on selected an expected return on plan assets assumption for its U.S. pension plans of 7.5%, the same rate used in 2023, to be used in determining pension expense for 2024.
Snap-on intends to make contributions of $6.9 million to its foreign pension plans and $2.4 million to its domestic pension plans in 2023, as required by law. Depending on market and other conditions, Snap-on may make discretionary cash contributions to its pension plans in 2023.
Snap-on intends to make contributions of $6.0 million to its foreign pension plans and $3.7 million to its domestic pension plans in 2024, as required by law. Depending on market and other conditions, Snap-on may make discretionary cash contributions to its pension plans in 2024.
Unless otherwise indicated, references in this document to “fiscal 2022” or “2022” refer to the fiscal year ended December 31, 2022; references to “fiscal 2021” or “2021” refer to the fiscal year ended January 1, 2022; and references to “fiscal 2020” or “2020” refer to the fiscal year ended January 2, 2021.
Unless otherwise indicated, references in this document to “fiscal 2023” or “2023” refer to the fiscal year ended December 30, 2023; references to “fiscal 2022” or “2022” refer to the fiscal year ended December 31, 2022; and references to “fiscal 2021” or “2021” refer to the fiscal year ended January 1, 2022.
Net earnings attributable to Snap-on in 2021 were $820.5 million, or $14.92 per diluted share. 2022 ANNUAL REPORT 29 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Summary of Segment Performance The Commercial & Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide, including customers in the aerospace, natural resources, government and military, power generation, transportation and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels.
Net earnings attributable to Snap-on of $1,011.1 million, or $18.76 per diluted share, in 2023 compared to $911.7 million, or $16.82 per diluted share, in 2022, an increase of $99.4 million or $1.94 per diluted share. 2023 ANNUAL REPORT 29 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Summary of Segment Performance The Commercial & Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide, including customers in the aerospace, natural resources, government and military, power generation, transportation and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels.
Snap-on periodically evaluates its cash held outside the United States and may pursue opportunities to repatriate certain foreign cash amounts to the extent that it can be accomplished in a tax efficient manner. 2022 ANNUAL REPORT 43 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Trade and other accounts receivable – net of $761.7 million as of 2022 year end increased $79.4 million from 2021 year-end levels primarily due to higher sales, partially offset by $18.2 million of foreign currency translation.
Snap-on periodically evaluates its cash held outside the United States and may pursue opportunities to repatriate certain foreign cash amounts to the extent that it can be accomplished in a tax efficient manner. 2023 ANNUAL REPORT 43 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Trade and other accounts receivable – net of $791.3 million as of 2023 year end represented an increase of $29.6 million from 2022 year-end levels primarily due to higher sales, $9.3 million of foreign currency translation and $4.1 million from acquisitions.
As a result of these factors, segment operating earnings of $110.6 million in the fourth quarter of 2022, including $2.1 million of favorable foreign currency effects, increased $13.4 million, or 13.8%, from $97.2 million in 2021. Operating margin for the Repair Systems & Information Group of 25.3% in the quarter compared to 24.8% last year.
As a result of these factors, segment operating earnings of $113.3 million in the fourth quarter of 2023, including $0.4 million of favorable foreign currency effects, compared to $110.6 million in 2022, an increase of $2.7 million or 2.4%. Operating margin for the Repair Systems & Information Group of 25.1% in the quarter compared to 25.3% last year.
As of year-end 2022, the company had $165.2 million in purchase commitments to be paid in 2023 and $10.9 million to be paid thereafter. Snap-on intends to make contributions of $6.9 million to its foreign pension plans and $2.4 million to its domestic pension plans in 2023, as required by law.
As of year-end 2023, the company had $138.0 million in purchase commitments to be paid in 2024 and $11.4 million to be paid thereafter. Snap-on intends to make contributions of $6.0 million to its foreign pension plans and $3.7 million to its domestic pension plans in 2024, as required by law.
Due to the uncertainty of the timing of settlements with taxing authorities, Snap-on is unable to make reasonably reliable estimates of the period of cash settlement of unrecognized tax benefits totaling $5.6 million for its remaining uncertain tax liabilities.
Due to the uncertainty of the timing of settlements with taxing authorities, Snap-on is unable to make reasonably reliable estimates of the period of cash settlement of unrecognized tax benefits totaling $7.5 million for its remaining uncertain tax liabilities. See Note 8 to the Consolidated Financial Statements for information on income taxes.
The organic gain is comprised of double-digit increases in sales of undercar equipment and in activity with OEM dealerships, and a mid single-digit increase in sales of diagnostic and repair information products to independent repair shop owners and managers.
The organic gain includes a high single-digit increase in activity with OEM dealerships and a mid single-digit gain in sales of undercar equipment, partially offset by a high single-digit decline in sales of diagnostic and repair information products to independent repair shop owners and managers.
In 2022, Snap-on repurchased 899,000 shares of its common stock for $198.1 million under its previously announced share repurchase programs. As of 2022 year end, Snap-on had remaining availability to repurchase up to an additional $362.4 million in common stock pursuant to its Board’s authorizations. Snap-on repurchased 1,943,900 shares of its common stock for $431.3 million in 2021.
In 2023, Snap-on repurchased 1,126,000 shares of its common stock for $294.7 million under its previously announced share repurchase programs. As of 2023 year end, Snap-on had remaining availability to repurchase up to an additional $282.9 million in common stock pursuant to its Board’s authorizations. Snap-on repurchased 899,000 shares of its common stock for $198.1 million in 2022.
The company has determined that its reporting units for testing goodwill impairment are its operating segments or components of an operating segment that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results. Within its four reportable operating segments, the company has identified 11 reporting units.
Estimated cash flows and related goodwill are grouped at the reporting unit level. The company has determined that its reporting units for testing goodwill impairment are its operating segments or components of an operating segment that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results.
Depreciation expense was $71.5 million in 2022 and $75.6 million in 2021. Amortization expense was $28.7 million in 2022 and $29.2 million in 2021. See Note 6 and Note 7 to the Consolidated Financial Statements for information on property and equipment, goodwill and other intangible assets.
Amortization expense was $27.1 million in 2023 and $28.7 million in 2022. See Note 6 and Note 7 to the Consolidated Financial Statements for information on property and equipment and goodwill and other intangible assets.
As of 2022 year end, the company has no accumulated impairment losses. Although the company consistently uses the same methods in developing the assumptions and estimates underlying the fair value calculations, such estimates are uncertain by nature and can vary from actual results.
Although the company consistently uses the same methods in developing the assumptions and estimates underlying the fair value calculations, such estimates are uncertain by nature and can vary from actual results.
Net cash used by financing activities of $485.0 million in 2022 included $313.1 million for dividend payments to shareholders and $198.1 million for the repurchase of 899,000 shares of Snap-on’s common stock. These amounts were partially offset by $55.0 million of proceeds from stock purchase and option plan exercises and net proceeds from other short-term borrowings of $1.6 million.
Net cash used by financing activities of $572.9 million in 2023 included $355.6 million for dividend payments to shareholders, $294.7 million for the repurchase of 1,126,000 shares of Snap-on’s common stock, and net repayments of other short-term borrowings of $1.7 million. These amounts were partially offset by $113.6 million of proceeds from stock purchase plan and stock option exercises.
The current portions of net finance and contract receivables of $672.1 million as of 2022 year end compared to $652.7 million at 2021 year end. The long-term portions of net finance and contract receivables of $1,554.6 million as of 2022 year end compared to $1,492.2 million at 2021 year end.
The current portions of net finance and contract receivables of $714.9 million as of 2023 year end compared to $672.1 million at 2022 year end. The long-term portions of net finance and contract receivables of $1,692.1 million as of 2023 year end compared to $1,554.6 million at 2022 year end.
Snap-on evaluates the recoverability of goodwill by utilizing an income approach that estimates the fair value of the future discounted cash flows of the reporting units to which the goodwill relates.
Within its four reportable operating segments, the company has identified 11 reporting units. Snap-on evaluates the recoverability of goodwill by utilizing an income approach that estimates the fair value of the future discounted cash flows of the reporting units to which the goodwill relates.
Finance receivables are comprised of extended-term installment payment contracts to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics, and equipment products on an extended-term payment plan, with average payment terms of approximately four years. Net cash used by investing activities in 2022 also included $0.5 million of cash provided by acquisitions.
Finance receivables are comprised of extended-term installment payment contracts to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics, and equipment products on an extended-term payment plan, with average payment terms of approximately four years.
On November 4, 2022, the company announced that its Board increased the quarterly cash dividend by 14.1% to $1.62 per share ($6.48 per share annualized). Quarterly dividends in 2022 were $1.62 per share in the fourth quarter and $1.42 per share in the first three quarters ($5.88 per share for the year).
On November 2, 2023, the company announced that its Board increased the quarterly cash dividend by 14.8% to $1.86 per share ($7.44 per share annualized). Quarterly dividends in 2023 were $1.86 per share in the fourth quarter and $1.62 per share in the first three quarters ($6.72 per share for the year).
Notes payable of $17.2 million as of 2022 year end compared to $17.4 million as of 2021 year end. Average notes payable outstanding were $18.6 million and $16.7 million in 2022 and 2021, respectively. The 2022 weighted-average interest rate on such borrowings of 9.93% compared with 8.39% in 2021.
Notes payable of $15.6 million as of 2023 year end compared to $17.2 million as of 2022 year end. Average notes payable outstanding were $17.5 million and $18.6 million in 2023 and 2022, respectively. The 2023 weighted-average interest rate on such borrowings of 11.0% compared with 9.9% in 2022.
Financial Services Fourth Quarter (Amounts in millions) 2022 2021 Change Financial services revenue $ 88.3 100.0 % $ 86.9 100.0 % $ 1.4 1.6 % Financial services expenses (24.4) (27.6) % (19.7) (22.7) % (4.7) (23.9) % Segment operating earnings $ 63.9 72.4 % $ 67.2 77.3 % $ (3.3) (4.9) % Financial services revenue of $88.3 million in the fourth quarter of 2022 increased $1.4 million, or 1.6%, from $86.9 million last year.
Financial Services Fourth Quarter (Amounts in millions) 2023 2022 Change Financial services revenue $ 97.2 100.0 % $ 88.3 100.0 % $ 8.9 10.1 % Financial services expenses (29.3) (30.1) % (24.4) (27.6) % (4.9) (20.1) % Segment operating earnings $ 67.9 69.9 % $ 63.9 72.4 % $ 4.0 6.3 % Financial services revenue of $97.2 million in the fourth quarter of 2023 increased $8.9 million, or 10.1%, from last year.
As of 2022 year end, working capital (current assets less current liabilities) of $2,397.3 million increased $326.1 million from $2,071.2 million as of 2021 year end primarily as a result of other net changes in working capital discussed below.
As of 2023 year end, working capital (current assets less current liabilities) of $2,710.4 million represented an increase of $313.1 million from $2,397.3 million as of 2022 year end primarily as a result of other net changes in working capital discussed below.
Investing Activities Net cash used by investing activities of $206.2 million in 2022 included additions to finance receivables of $955.8 million, partially offset by collections of $826.9 million. Net cash used by investing activities of $290.4 million in 2021 included additions to finance receivables of $878.1 million, partially offset by collections of $854.2 million.
Investing Activities Net cash used by investing activities of $331.8 million in 2023 included additions to finance receivables of $1,029.0 million, partially offset by collections of $833.5 million. Net cash used by investing activities of $206.2 million in 2022 included additions to finance receivables of $955.8 million, partially offset by collections of $826.9 million.
References in this document to 2022, 2021 and 2020 year end refer to December 31, 2022, January 1, 2022, and January 2, 2021, respectively. Snap-on’s 2022 and 2021 fiscal years each contained 52 weeks of operating results. Snap-on’s 2020 fiscal year contained 53 weeks of operating results with the extra week occurring in the fourth quarter.
References in this document to 2023, 2022 and 2021 year end refer to December 30, 2023, December 31, 2022, and January 1, 2022, respectively. Snap-on’s 2023, 2022 and 2021 fiscal years each contained 52 weeks of operating results.
Lowering Snap-on’s foreign discount rate assumption by 50 bps would have increased Snap-on’s 2022 foreign pension expense and projected benefit obligation by approximately $1.4 million and $12.3 million, respectively.
Lowering Snap-on’s foreign discount rate assumption by 50 bps would have increased Snap-on’s 2023 foreign pension expense and projected benefit obligation by approximately $0.9 million and $13.5 million, respectively.
For segment reporting purposes, the results of operations and assets of Dealer-FX have been included in the Repair Systems & Information Group since the acquisition date, and the results of operations and assets of AutoCrib Germany and Pradines have been included in the Commercial & Industrial Group since the respective acquisition dates.
For segment reporting purposes, the results o f operations and assets of SAVTEQ have been included in the Repair Systems & Information Group and those of Mountz have been included in the Commercial & Industrial Group since the respective acquisition dates.
The effective income tax rate on earnings attributable to Snap-on was 22.8% in 2022 and 23.2% in 2021. See Note 9 to the Consolidated Financial Statements for information on income taxes.
See Note 17 to the Consolidated Financial Statements for additional information on Other income (expense) – net. The effective income tax rate on earnings attributable to Snap-on was 22.5% in 2023 and 22.8% in 2022. See Note 8 to the Consolidated Financial Statements for additional information on income taxes.
Gross margin (gross profit as a percentage of net sales) of 48.5% in 2022 declined 110 basis points (100 basis points (“bps”) equals 1.0 percent) from last year primarily due to higher material and other costs, partially offset by higher sales volumes and pricing actions, benefits from the company’s RCI initiatives, and 20 bps of favorable foreign currency effects.
Gross margin (gross profit as a percentage of net sales) improved 120 basis points (100 basis points (“bps”) equals 1.0 percent) from 2022 primarily due to increased sales volumes and pricing actions, lower material and other costs, and benefits from the company’s RCI initiatives. These improvements were partially offset by 30 bps of unfavorable foreign currency effects.
The combined $81.8 million increase in net current and long-term finance and contract receivables compared to 2021 year-end levels is primarily due to an increase in net receivable originations, partially offset by $20.5 million of foreign currency translation.
The combined $180.3 million increase in net current and long-term finance and contract receivables compared to 2022 year-end levels is primarily due to an increase in net receivable originations and $9.1 million of foreign currency translation.
Snap-on believes that its cash generated from operations, as well as its available cash on hand and funds available from its credit facilities will be sufficient to fund the company’s capital expenditure requirements in 2023. 2022 ANNUAL REPORT 45 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Financing Activities Net cash used by financing activities of $485.0 million in 2022 included net proceeds from other short-term borrowings of $1.6 million.
Snap-on believes that its cash generated from operations, as well as its available cash on hand and funds available from its credit facilities will be sufficient to fund the company’s capital expenditure requirements in 2024. Financing Activities Net cash used by financing activities of $572.9 million in 2023 included net repayments of other short-term borrowings of $1.7 million.
See Note 9 to the Consolidated Financial Statements for information on income taxes. 46 SNAP-ON INCORPORATED Environmental Matters Snap-on is subject to various federal, state and local government requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.
Environmental Matters Snap-on is subject to various federal, state and local government requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.
These amounts were partially offset by $162.4 million of proceeds from stock purchase and option plan exercises and net proceeds from other short-term borrowings of $3.3 million. 2022 ANNUAL REPORT 31 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations 2022 vs. 2021 Results of operations for 2022 and 2021 are as follows: (Amounts in millions) 2022 2021 Change Net sales $ 4,492.8 100.0 % $ 4,252.0 100.0 % $ 240.8 5.7 % Cost of goods sold (2,311.7) (51.5) % (2,141.2) (50.4) % (170.5) (8.0) % Gross profit 2,181.1 48.5 % 2,110.8 49.6 % 70.3 3.3 % Operating expenses (1,239.9) (27.6) % (1,259.3) (29.6) % 19.4 1.5 % Operating earnings before financial services 941.2 20.9 % 851.5 20.0 % 89.7 10.5 % Financial services revenue 349.7 100.0 % 349.7 100.0 % — — Financial services expenses (83.7) (23.9) % (77.7) (22.2) % (6.0) (7.7) % Operating earnings from financial services 266.0 76.1 % 272.0 77.8 % (6.0) (2.2) % Operating earnings 1,207.2 24.9 % 1,123.5 24.4 % 83.7 7.4 % Interest expense (47.1) (1.0) % (53.1) (1.2) % 6.0 11.3 % Other income (expense) – net 42.5 0.9 % 16.5 0.4 % 26.0 NM Earnings before income taxes and equity earnings 1,202.6 24.8 % 1,086.9 23.6 % 115.7 10.6 % Income tax expense (268.7) (5.5) % (247.0) (5.3) % (21.7) (8.8) % Earnings before equity earnings 933.9 19.3 % 839.9 18.3 % 94.0 11.2 % Equity earnings, net of tax — — 1.5 — (1.5) NM Net earnings 933.9 19.3 % 841.4 18.3 % 92.5 11.0 % Net earnings attributable to noncontrolling interests (22.2) (0.5) % (20.9) (0.5) % (1.3) (6.2) % Net earnings attributable to Snap-on Inc. $ 911.7 18.8 % $ 820.5 17.8 % $ 91.2 11.1 % NM: Not meaningful Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.
These amounts were partially offset by $55.0 million of proceeds from stock purchase plan and stock option exercises and net proceeds from other short-term borrowings of $1.6 million. 2023 ANNUAL REPORT 31 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations 2023 vs. 2022 Results of operations for 2023 and 2022 are as follows: (Amounts in millions) 2023 2022 Change Net sales $ 4,730.2 100.0 % $ 4,492.8 100.0 % $ 237.4 5.3 % Cost of goods sold (2,381.1) (50.3) % (2,311.7) (51.5) % (69.4) (3.0) % Gross profit 2,349.1 49.7 % 2,181.1 48.5 % 168.0 7.7 % Operating expenses (1,309.2) (27.7) % (1,239.9) (27.6) % (69.3) (5.6) % Operating earnings before financial services 1,039.9 22.0 % 941.2 20.9 % 98.7 10.5 % Financial services revenue 378.1 100.0 % 349.7 100.0 % 28.4 8.1 % Financial services expenses (107.6) (28.5) % (83.7) (23.9) % (23.9) (28.6) % Operating earnings from financial services 270.5 71.5 % 266.0 76.1 % 4.5 1.7 % Operating earnings 1,310.4 25.7 % 1,207.2 24.9 % 103.2 8.5 % Interest expense (49.9) (1.0) % (47.1) (1.0) % (2.8) (5.9) % Other income (expense) – net 67.5 1.3 % 42.5 0.9 % 25.0 58.8 % Earnings before income taxes and equity earnings 1,328.0 26.0 % 1,202.6 24.8 % 125.4 10.4 % Income tax expense (293.4) (5.7) % (268.7) (5.5) % (24.7) (9.2) % Net earnings 1,034.6 20.3 % 933.9 19.3 % 100.7 10.8 % Net earnings attributable to noncontrolling interests (23.5) (0.5) % (22.2) (0.5) % (1.3) (5.9) % Net earnings attributable to Snap-on Inc. $ 1,011.1 19.8 % $ 911.7 18.8 % $ 99.4 10.9 % Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.
Net earnings attributable to Snap-on in 2022 of $911.7 million, or $16.82 per diluted share, increased $91.2 million, or $1.90 per diluted share, from $820.5 million, or $14.92 per diluted share, in 2021. Segment Results Snap-on’s business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance.
Net earnings attributable to Snap-on of $1,011.1 million, or $18.76 per diluted share, in 2023 compared to $911.7 million, or $16.82 per diluted share, in 2022, an increase of $99.4 million or $1.94 per diluted share. Segment Results Snap-on’s business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance.
As a result of these factors, segment operating earnings of $458.7 million in 2022, including $10.1 million of unfavorable foreign currency effects, increased $47.6 million, or 11.6%, compared to $411.1 million in 2021. Operating margin for the Snap‑on Tools Group of 22.1% in 2022 compared to 21.2% last year.
As a result of these factors, segment operating earnings of $493.8 million in 2023, including $12.5 million of unfavorable foreign currency effects, compared to $458.7 million in 2022, an increase of $35.1 million or 7.7%. Operating margin for the Snap‑on Tools Group of 23.6% in 2023 compared to 22.1% last year.
Non-GAAP Supplemental Data The following non-GAAP supplemental data is presented for informational purposes to provide readers with insight into the information used by management for assessing the operating performance of Snap-on’s non-financial services (“Operations”) and “Financial Services” businesses.
The year-over-year decrease in corporate expenses primarily reflects the recovery of costs associated with a legal matter. Non-GAAP Supplemental Data The following non-GAAP supplemental data is presented for informational purposes to provide readers with insight into the information used by management for assessing the operating performance of Snap-on’s non-financial services (“Operations”) and Financial Services businesses.
The year-over-year decrease primarily reflects lower costs associated with the company’s employee stock purchase plan. 2022 ANNUAL REPORT 35 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Quarterly Data (Amounts in millions, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Total 2022 Net sales $ 1,097.8 $ 1,136.6 $ 1,102.5 $ 1,155.9 $ 4,492.8 Gross profit 534.3 553.5 532.6 560.7 2,181.1 Financial services revenue 87.7 86.4 87.3 88.3 349.7 Financial services expenses (17.3) (21.1) (20.9) (24.4) (83.7) Net earnings 222.7 237.2 229.5 244.5 933.9 Net earnings attributable to Snap-on Incorporated 217.4 231.5 223.9 238.9 911.7 Earnings per share – basic* 4.07 4.34 4.21 4.50 17.14 Earnings per share – diluted* 4.00 4.27 4.14 4.42 16.82 Cash dividends paid per share 1.42 1.42 1.42 1.62 5.88 First Quarter Second Quarter Third Quarter Fourth Quarter Total 2021 Net sales $ 1,024.6 $ 1,081.4 $ 1,037.7 $ 1,108.3 $ 4,252.0 Gross profit 513.6 543.1 520.7 533.4 2,110.8 Financial services revenue 88.6 86.9 87.3 86.9 349.7 Financial services expenses (23.3) (18.0) (16.7) (19.7) (77.7) Net earnings 197.6 213.2 201.5 229.1 841.4 Net earnings attributable to Snap-on Incorporated 192.6 208.0 196.2 223.7 820.5 Earnings per share – basic* 3.55 3.85 3.65 4.18 15.22 Earnings per share – diluted* 3.50 3.76 3.57 4.10 14.92 Cash dividends paid per share 1.23 1.23 1.23 1.42 5.11 * Amounts may not total to annual earnings per share because each quarter and year are calculated separately based on basic and diluted weighted-average common shares outstanding during each respective period. 36 SNAP-ON INCORPORATED Fourth Quarter Results of operations for the fourth quarters of 2022 and 2021 are as follows: Fourth Quarter (Amounts in millions) 2022 2021 Change Net sales $ 1,155.9 100.0 % $ 1,108.3 100.0 % $ 47.6 4.3 % Cost of goods sold (595.2) (51.5) % (574.9) (51.9) % (20.3) (3.5) % Gross profit 560.7 48.5 % 533.4 48.1 % 27.3 5.1 % Operating expenses (312.7) (27.0) % (301.2) (27.1) % (11.5) (3.8) % Operating earnings before financial services 248.0 21.5 % 232.2 21.0 % 15.8 6.8 % Financial services revenue 88.3 100.0 % 86.9 100.0 % 1.4 1.6 % Financial services expenses (24.4) (27.6) % (19.7) (22.7) % (4.7) (23.9) % Operating earnings from financial services 63.9 72.4 % 67.2 77.3 % (3.3) (4.9) % Operating earnings 311.9 25.1 % 299.4 25.1 % 12.5 4.2 % Interest expense (12.0) (1.0) % (11.3) (0.9) % (0.7) (6.2) % Other income (expense) – net 11.8 1.0 % 5.1 0.3 % 6.7 NM Earnings before income taxes 311.7 25.1 % 293.2 24.5 % 18.5 6.3 % Income tax expense (67.2) (5.4) % (64.1) (5.3) % (3.1) (4.8) % Net earnings 244.5 19.7 % 229.1 19.2 % 15.4 6.7 % Net earnings attributable to noncontrolling interests (5.6) (0.5) % (5.4) (0.5) % (0.2) (3.7) % Net earnings attributable to Snap-on Inc. $ 238.9 19.2 % $ 223.7 18.7 % $ 15.2 6.8 % NM: Not meaningful Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.
The year-over-year increase primarily reflects higher stock-based and performance-based compensation expense. 2023 ANNUAL REPORT 35 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Quarterly Data (Amounts in millions, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Total 2023 Net sales $ 1,183.0 $ 1,191.3 $ 1,159.3 $ 1,196.6 $ 4,730.2 Gross profit 589.6 603.7 578.2 577.6 2,349.1 Financial services revenue 92.6 93.4 94.9 97.2 378.1 Financial services expenses (26.3) (26.5) (25.5) (29.3) (107.6) Net earnings 254.3 269.9 249.1 261.3 1,034.6 Net earnings attributable to Snap-on Incorporated 248.7 264.0 243.1 255.3 1,011.1 Earnings per share – basic* 4.69 4.98 4.60 4.84 19.11 Earnings per share – diluted* 4.60 4.89 4.51 4.75 18.76 Cash dividends paid per share 1.62 1.62 1.62 1.86 6.72 First Quarter Second Quarter Third Quarter Fourth Quarter Total 2022 Net sales $ 1,097.8 $ 1,136.6 $ 1,102.5 $ 1,155.9 $ 4,492.8 Gross profit 534.3 553.5 532.6 560.7 2,181.1 Financial services revenue 87.7 86.4 87.3 88.3 349.7 Financial services expenses (17.3) (21.1) (20.9) (24.4) (83.7) Net earnings 222.7 237.2 229.5 244.5 933.9 Net earnings attributable to Snap-on Incorporated 217.4 231.5 223.9 238.9 911.7 Earnings per share – basic* 4.07 4.34 4.21 4.50 17.14 Earnings per share – diluted* 4.00 4.27 4.14 4.42 16.82 Cash dividends paid per share 1.42 1.42 1.42 1.62 5.88 * Amounts may not total to annual earnings per share because each quarter and year are calculated separately based on basic and diluted weighted-average common shares outstanding during each respective period. 36 SNAP-ON INCORPORATED Fourth Quarter Results of operations for the fourth quarters of 2023 and 2022 are as follows: Fourth Quarter (Amounts in millions) 2023 2022 Change Net sales $ 1,196.6 100.0 % $ 1,155.9 100.0 % $ 40.7 3.5 % Cost of goods sold (619.0) (51.7) % (595.2) (51.5) % (23.8) (4.0) % Gross profit 577.6 48.3 % 560.7 48.5 % 16.9 3.0 % Operating expenses (319.7) (26.7) % (312.7) (27.0) % (7.0) (2.2) % Operating earnings before financial services 257.9 21.6 % 248.0 21.5 % 9.9 4.0 % Financial services revenue 97.2 100.0 % 88.3 100.0 % 8.9 10.1 % Financial services expenses (29.3) (30.1) % (24.4) (27.6) % (4.9) (20.1) % Operating earnings from financial services 67.9 69.9 % 63.9 72.4 % 4.0 6.3 % Operating earnings 325.8 25.2 % 311.9 25.1 % 13.9 4.5 % Interest expense (12.5) (1.0) % (12.0) (1.0) % (0.5) (4.2) % Other income (expense) – net 17.5 1.4 % 11.8 1.0 % 5.7 48.3 % Earnings before income taxes 330.8 25.6 % 311.7 25.1 % 19.1 6.1 % Income tax expense (69.5) (5.4) % (67.2) (5.4) % (2.3) (3.4) % Net earnings 261.3 20.2 % 244.5 19.7 % 16.8 6.9 % Net earnings attributable to noncontrolling interests (6.0) (0.5) % (5.6) (0.5) % (0.4) (7.1) % Net earnings attributable to Snap-on Inc. $ 255.3 19.7 % $ 238.9 19.2 % $ 16.4 6.9 % Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.
The current focus on these matters is expected to result in additional and/or more restrictive regulations, requirements and/or industry or third-party standards to reduce or mitigate global warming and other environmental or sustainability risks, though the timing is uncertain. Snap-on continues to monitor developments in this area.
The current focus on these matters is expected to result in additional and/or more restrictive regulations, and industry or third-party requirements and standards to reduce or mitigate climate change as well as other environmental or sustainability risks. The timing of certain of these regulations and requirements has yet to be determined. Snap-on is monitoring developments in this area.
Snap-on Tools Group Fourth Quarter (Amounts in millions) 2022 2021 Change Segment net sales $ 542.7 100.0 % $ 504.8 100.0 % $ 37.9 7.5 % Cost of goods sold (308.3) (56.8) % (283.3) (56.1) % (25.0) (8.8) % Gross profit 234.4 43.2 % 221.5 43.9 % 12.9 5.8 % Operating expenses (118.3) (21.8) % (111.0) (22.0) % (7.3) (6.6) % Segment operating earnings $ 116.1 21.4 % $ 110.5 21.9 % $ 5.6 5.1 % Segment net sales of $542.7 million in the fourth quarter of 2022 increased $37.9 million, or 7.5%, from 2021 levels, reflecting a $47.4 million, or 9.6%, organic sales gain, partially offset by $9.5 million of unfavorable foreign currency translation.
Snap-on Tools Group Fourth Quarter (Amounts in millions) 2023 2022 Change Segment net sales $ 513.3 100.0 % $ 542.7 100.0 % $ (29.4) (5.4) % Cost of goods sold (281.2) (54.8) % (308.3) (56.8) % 27.1 8.8 % Gross profit 232.1 45.2 % 234.4 43.2 % (2.3) (1.0) % Operating expenses (121.1) (23.6) % (118.3) (21.8) % (2.8) (2.4) % Segment operating earnings $ 111.0 21.6 % $ 116.1 21.4 % $ (5.1) (4.4) % Segment net sales of $513.3 million in the fourth quarter of 2023 represented a decrease of $29.4 million, or 5.4%, from 2022 levels, reflecting a $31.0 million, or 5.7%, organic sales decline, partially offset by $1.6 million of favorable foreign currency translation.
In the fourth quarters of 2022 and 2021, the respective average yields on finance receivables were 17.6% and 17.7%. In the fourth quarters of 2022 and 2021, the average yields on contract receivables were 8.6% and 8.5%, respectively. Originations of $299.7 million in the fourth quarter of 2022 increased $43.4 million, or 16.9%, from 2021 levels.
In the fourth quarters of 2023 and 2022, the respective average yields on finance receivables were 17.8% and 17.6%. In the fourth quarters of 2023 and 2022 , the average yields on contract receivables were 8.9% and 8.6%, respectively. Originations of $303.1 million in the fourth quarter of 2023 represented an increase of $3.4 million, or 1.1%, from 2022 levels.
Operating earnings before financial services of $941.2 million in 2022 increased $89.7 million, or 10.5%, compared to $851.5 million in 2021. As a percentage of net sales, operating earnings before financial services of 20.9% compared to 20.0% last year. Operating earnings of $1,207.2 million in 2022 increased $83.7 million, or 7.4%, compared to $1,123.5 million last year.
Operating earnings before financial services of $1,039.9 million in 2023 compared to $941.2 million in 2022, an increase of $98.7 million or 10.5%. As a percentage of net sales, operating earnings before financial services were 22.0% compared to 20.9% last year.
Summary of Consolidated Performance Consolidated net sales of $4,492.8 million in 2022 increased $240.8 million, or 5.7%, from 2021 levels, reflecting a $357.2 million, or 8.7%, organic gain and $8.5 million of acquisition-related sales, partially offset by $124.9 million of unfavorable foreign currency translation.
Summary of Consolidated Performance Consolidated net sales of $4,730.2 million in 2023 represented an increase of $237.4 million, or 5.3%, from 2022 levels, reflecting a $250.7 million, or 5.6%, organic gain and $5.5 million of acquisition-related sales, partially offset by $18.8 million of unfavorable foreign currency translation.
As a result of these factors, segment operating earnings of $47.9 million in the fourth quarter of 2022, including $2.3 million of unfavorable foreign currency effects, decreased $2.2 million from 2021 levels. Operating margin for the Commercial & Industrial Group of 14.0% in the quarter was unchanged from last year.
As a result of these factors, segment operating earnings of $54.1 million in the fourth quarter of 2023, including $1.4 million of unfavorable foreign currency effects, compared to $47.9 million in 2022 , an increase of $6.2 million or 12.9%. Operating margin for the Commercial & Industrial Group of 14.9% in the quarter compared to 14.0% last year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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See Note 11 to the Consolidated Financial Statements for information on foreign currency risk management. Interest Rate Risk Management Snap-on may manage the exposure created by the differing maturities and interest rate structures of Snap-on’s borrowings through the use of interest rate swap agreements.
See Note 10 to the Consolidated Financial Statements for information on foreign currency risk management. Interest Rate Risk Management Snap-on may manage the exposure created by the differing maturities and interest rate structures of Snap-on’s borrowings through the use of interest rate swap agreements.
Treasury lock agreements may be used to manage the potential change in interest rates in anticipation of the issuance of fixed rate debt. See Note 11 to the Consolidated Financial Statements for information on interest rate risk management.
Treasury lock agreements may be used to manage the potential change in interest rates in anticipation of the issuance of fixed rate debt. See Note 10 to the Consolidated Financial Statements for information on interest rate risk management.
See Note 11 to the Consolidated Financial Statements for additional information on stock-based deferred compensation risk management. 2022 ANNUAL REPORT 51 Credit Risk Credit risk is the possibility of loss from a customer’s failure to make payments according to contract terms.
See Note 10 to the Consolidated Financial Statements for additional information on stock-based deferred compensation risk management. 2023 ANNUAL REPORT 51 Credit Risk Credit risk is the possibility of loss from a customer’s failure to make payments according to contract terms.
The estimated maximum potential net one-day loss in fair value, calculated using the VAR model, as of 2022 and 2021 year end was $18.0 million and $20.6 million, respectively, on interest rate-sensitive financial instruments, and $0.2 million and $0.3 million, respectively, on foreign currency-sensitive financial instruments.
The estimated maximum potential net one-day loss in fair value, calculated using the VAR model, as of 2023 and 2022 year end was $15.2 million, consisting of a $15.8 million loss on interest rate-sensitive financial instruments and a $0.6 million gain on foreign currency-sensitive financial instruments; and $18.2 million, consisting of a $18.0 million loss on interest rate-sensitive financial instruments and a $0.2 million loss on foreign currency-sensitive financial instruments, respectively.
Economic Risk Economic risk is the possibility of loss resulting from economic instability in certain areas of the world. Snap-on continually monitors its exposure in these markets. For example, the company is monitoring the impact of and developments related to Russia’s invasion of Ukraine and the ongoing COVID-19 pandemic, which continue to have an impact on the global economy.
Economic Risk Economic risk is the possibility of loss resulting from economic instability in certain areas of the world. Snap-on continually monitors its exposure in these markets. For example, the company is monitoring the continuing global economic impact of and developments related to Russia’s invasion of Ukraine and the conflict in the Middle East.

Other SNA 10-K year-over-year comparisons