What changed in this filing

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Item 1. Business

2022-02-11 compared with 2021-02-11 · 65 added, 67 removed, 238 unchanged (36% of the section changed)

Snap-on is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks.

Products and services include hand and power tools, tool storage, diagnostics software, handheld and PC-based diagnostic products, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, such as aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education.

Products and services include hand and power tools, tool storage, diagnostic software, handheld and computer-based diagnostic products, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, such as aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education.

Snap-on also derives income from various financing programs designed to facilitate the sales of its products and support its franchise business.

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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.

SNAP-ON INCORPORATED

Snap-on’s primary customer segments include:

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Snap-on’s Financial Services customer segment includes:

(i) franchisees’ customers, principally serving vehicle repair technicians, and Snap-on customers who require financing for the purchase or lease of tools and diagnostics and equipment products on an extended-term payment plan;

(i) franchisees’ customers, principally serving vehicle repair technicians, 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) franchisees who require financing options for vehicle and business needs.

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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.

Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.

SNAP-ON INCORPORATED

All intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.

Recent Acquisitions

Snap-on has continued to expand its business throughout the years via acquisitions.

Below are acquisitions completed in the last three fiscal years:

On September 28, 2020, Snap-on acquired substantially all of the assets of AutoCrib, Inc.

(“AutoCrib”) for a cash purchase price of $35.4 million.

AutoCrib, based in Tustin, California, designs, manufactures and markets asset and tool control solutions.

The acquisition of AutoCrib complemented and expanded Snap-on’s existing tool control offering to customers in a variety of industrial applications, including aerospace, automotive, military, natural resources and general industry.

On January 31, 2020, Snap-on acquired substantially all of the assets related to the TreadReader product line from Sigmavision Limited (“Sigmavision”) for a cash purchase price of $5.9 million.

Sigmavision designs and manufactures handheld devices and drive-over ramps that provide tire information for use in the automotive industry.

The acquisition of the TreadReader product line enhanced and expanded Snap-on’s existing capabilities in serving vehicle repair facilities and expanded the company’s presence with repair shop owners and managers.

On August 7, 2019, Snap-on acquired Cognitran Limited (“Cognitran”) for a cash purchase price of $30.6 million (or $29.6 million, net of cash acquired).

Cognitran, based in Chelmsford, U.K., specializes in flexible, modular and highly scalable “Software as a Service” (SaaS) products for OEM customers and their dealers, focused on the creation and delivery of service, diagnostics, parts and repair information to the OEM dealers and connected vehicle platforms.

The acquisition of Cognitran enhanced and expanded Snap-on’s capabilities in providing shop efficiency solutions through integrated upstream services to OEM customers in automotive, heavy duty, agricultural and recreational applications.

On April 2, 2019, Snap-on acquired Power Hawk Technologies, Inc.

(“Power Hawk”) for a cash purchase price of $7.9 million.

Power Hawk, based in Rockaway, New Jersey, designs, manufactures and distributes rescue tools and related equipment for a variety of military, governmental, fire and rescue, and emergency operations.

The acquisition of the Power Hawk product line complemented and increased Snap-on’s existing product offering and broadened its established capabilities in serving critical industries.

On January 25, 2019, Snap-on acquired substantially all of the assets of TMB GeoMarketing Limited (“TMB”) for a cash purchase price of $1.3 million.

TMB, based in Dorking, U.K., designs planning software used by OEMs to optimize dealer locations and manage the performance of dealer outlets.

The acquisition of TMB extended Snap-on’s product line in its core dealer network solutions business.

On January 31, 2018, Snap-on acquired substantially all of the assets of George A.

Sturdevant, Inc.

(d/b/a Fastorq) for a cash purchase price of $3.0 million.

Fastorq, based in New Caney, Texas, designs, assembles and distributes hydraulic torque and hydraulic tensioning products for use in critical industries.

The acquisition of the Fastorq product line complemented and increased Snap-on’s existing torque product offering and broadened its established capabilities in serving in critical industries.

For segment reporting purposes, the results of operations and assets of Sigmavision, Cognitran and TMB have been included in the Repair Systems & Information Group since the respective acquisition dates, and the results of operations and assets of AutoCrib, Power Hawk and Fastorq have been included in the Commercial & Industrial Group since the respective acquisition dates.

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.

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.

For information regarding recent acquisitions, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial Statements.

Information Available on the Company’s Website

Additional information regarding Snap-on and its products is available on the company’s website at www.snapon.com .

Additional information about Snap-on, including its products and its sustainability commitment, is available on the company’s website at www.snapon.com .

Snap-on is not including the information contained on its website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.

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The majority of products are manufactured by Snap-on and, in completing the product offering, other items are purchased from external manufacturers.

The diagnostics, information and management systems product category includes handheld and PC-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, OEM purchasing facilitation services, and warranty management systems and analytics to help OEM dealerships manage and track performance.

The diagnostics, information and management systems product category includes handheld and computer-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, OEM purchasing facilitation services, and warranty management systems and analytics to help OEM dealerships manage and track performance.

The equipment product category includes solutions for the service of vehicles and industrial equipment.

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Cognitran OEM SaaS products

Dealer-FX Service operation solutions and OEM SaaS systems

Ecotechnics Vehicle air conditioning service equipment

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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 and diagnostic and equipment products on an extended-term payment plan;

(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.

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The vehicle service and repair sector has three main customer groups:

(i) professional technicians who purchase tools and diagnostic and equipment products for use in their work;

(ii) other professional customers related to vehicle repair, including owners and managers of independent repair shops and OEM dealerships who purchase tools and diagnostic and equipment products for use by multiple technicians within a service or repair facility;

(i) professional technicians who purchase tools, diagnostics, and equipment products for use in their work;

(ii) other professional customers related to vehicle repair, including owners and managers of independent repair shops and OEM dealerships who purchase tools, diagnostics, and equipment products for use by multiple technicians within a service or repair facility;

and (iii) OEMs.

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Snap-on’s mobile tool distribution system offers technicians the convenience of purchasing quality tools at their place of business with minimal disruption of their work routine.

Snap-on also provides owners and managers of repair shops, where technicians work, with tools, diagnostic equipment, and repair and service information, including electronic parts catalogs and shop management products.

Snap-on also provides owners and managers of repair shops, where technicians work, with tools, diagnostics, equipment, and repair and service information, including electronic parts catalogs and shop management 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.

The vehicle service and repair sector is characterized by an increasing rate of technological change within motor vehicles, vehicle population growth and increasing vehicle life, and the resulting effects of these changes on the businesses of both our suppliers and customers.

Snap-on believes it is a meaningful participant in the vehicle service and repair market sector.

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.

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.

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.

Snap-on believes it is well-positioned to innovate new products to address these changing needs and to extend its leadership position in the expanding vehicle service and repair market sector.

Industrial Sector

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mining operations;

energy and power generation operations;

power generation operations, including those associated with alternative energies;

equipment fabricators and operators;

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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.

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.

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The following discussion summarizes Snap-on’s general approach for each channel and is not intended to be all-inclusive.

SNAP-ON INCORPORATED

Mobile Van Channel

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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, and diagnostic and repair information products, which can be transported in a van or trailer and demonstrated during a sales call.

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.

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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.

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 diagnostic and equipment products and services.

Snap-on also sells these products and services directly to OEMs and their franchised dealers.

2021 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.

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To effectively reach OEMs, which frequently have a multi-national presence, Snap-on has deployed focused business teams globally.

2020 ANNUAL REPORT 9

Sales of certain tools and equipment are made through independent distributors who purchase the items from Snap-on and resell them to end users.

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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.

Diagnostic 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.

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.

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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While Snap-on does not believe that any single company competes with it across all of its product lines and distribution channels, various companies compete in one or more product categories and/or distribution channels.

Snap-on believes it is a leading manufacturer and distributor of professional tools, tool storage, diagnostic and equipment products, and repair software and solutions, offering a broad line of these products to both vehicle service and industrial marketplaces.

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.

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Raw Materials and Purchased Product

Snap-on’s supply of raw materials and purchased components are generally and readily available from numerous suppliers.

Snap-on believes it has secured an ample supply of both bar and coil steel for the near future to ensure stable supply to meet material demands.

The company does not currently anticipate experiencing any significant impact in 2021 from steel pricing or availability issues, though it is continuing to monitor the impact of tariffs and other trade protection measures put in place by the U.S.

and other countries.

Snap-on’s supply of raw materials, including steel, and purchased components are generally available from numerous suppliers and the company continuously works to expand and enhance supplier relationships to meet its supply needs.

Snap-on believes it has secured a sufficient amount of raw materials and purchased components for the near future to meet the expected general sales demand.

While the company does experience raw material and component cost fluctuations from time to time and from operation to operation, including during the ongoing COVID-19 pandemic, it endeavors to employ its RCI processes to improve efficiencies and reduce waste to minimize the impact of any cost increases.

The company does not currently anticipate experiencing any significant impact in 2022 from raw material and purchased component cost or availability issues.

In addition, to date, the company has not observed any meaningful supply shortages or cost increases directly or indirectly resulting from climate change factors.

SNAP-ON INCORPORATED

Patents, Trademarks and Other Intellectual Property

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SNAP-ON INCORPORATED

Trademarks used by Snap-on are of continuing importance in the marketplace.

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Snap-on strategically licenses the Snap-on brand to carefully selected manufacturing and distribution companies for items such as apparel and a variety of other goods, in order to further build brand awareness and market presence for the company’s strongest brand.

Environmental and Government Regulations

Snap-on is subject to various environmental laws, ordinances, regulations, and requirements of government authorities in the United States and other nations.

At Snap-on, these environmental liabilities are managed through the Snap-on Environmental, Health and Safety Management System (“EH & SMS”), which is applied worldwide.

The system is based upon continual improvement and is certified to ISO 14001:2015 and OHSAS 18001:2007, verified through Det Norske Veritas (DNV) Certification, Inc.

Government Regulations

Snap-on is subject to various federal, state and local laws, such as those related to international trade, data privacy, tax and government contracts, as well as environmental laws, ordinances, regulations, and requirements of government authorities in the United States and other nations.

At Snap-on, environmental liabilities are managed through the Snap-on Environmental, Health and Safety Management System (“EH & SMS”), which is applied worldwide.

The system is based upon continual improvement and is certified to ISO 14001:2015 and ISO 45001:2018, verified through Det Norske Veritas (DNV) Certification, Inc.

Snap-on believes that it complies with applicable environmental and government requirements in its operations.

Expenditures on environmental and governmental matters through EH & SMS have not had, and Snap-on does not for the foreseeable future expect them to have, a material effect upon Snap-on’s capital expenditures, earnings or competitive position.

Expenditures on environmental and governmental matters through EH & SMS have not had a material effect upon Snap-on’s capital expenditures, earnings or competitive position.

However, the increasing global focus on climate change may result in new or more stringent environmental or climate-related regulations or standards.

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 January 1, 2022, Snap-on employed approximately 12,800 people worldwide, of which approximately 7,000 were employed in the United States and approximately 5,800 were outside the United States.

Approximately 2,600 employees are represented by unions and/or covered under collective bargaining agreements with varying expiration dates through 2023.

Based on the most recently filed EEO-1 data, which is available in the “Investors” section on the company’s website at www.snapon.com , females constitute 25.8% and minorities constitute 22.4% of the workforce in the United States.

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 2023.

In recent years, Snap-on has not experienced any significant work slowdowns, stoppages or other labor disruptions.

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.

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.

2021 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 work place safety.

• Snap-on believes strongly in workplace safety.

As a permanent priority agenda item at all operational meetings, safety comes first.

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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 and stock-based compensation as well as other stock plans, including an employee stock purchase plan for associates in the United States and Canada.

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.

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.

The company does not tolerate discrimination.

As part of our efforts, Snap-on has instituted company-wide training on inclusion and unconscious bias, and has expanded internship, mentorship and recruitment activities for underrepresented groups.

Additionally, to further our support of makers and fixers, both within and outside our company, Snap-on is partnering with national nonprofit organizations and community colleges to leverage career and technical education to expand the opportunities for underrepresented groups in our facilities, as well as in the critical industries we serve and beyond.

The company is also investing in and building relationships with several Historically Black Colleges and Universities (HBCUs) to help advance their missions and broaden the pipeline of Black engineers and other technically trained graduates.

• Snap-on’s people and the behaviors they display define our success, including integrity, respect and teamwork.

Annual employee training is used to reinforce ethics, environmental matters, health and safety, and regulatory compliance.

2020 ANNUAL REPORT 11

In response to the COVID-19 pandemic, Snap-on has generally maintained its headcount as the company accommodated its operations to the virus environment.

Snap-on has taken what it believes to be appropriate measures to ensure the health and safety of its personnel, including enhancing cleaning protocols, providing protective equipment, permitting remote work and providing wages for quarantined associates.

Snap-on also provided direct assistance to its franchisees as they accommodated the turbulence caused by the virus to enable continued service to their essential technician customers.

Annual employee training is used to reinforce ethics, environmental matters, health and safety, information security and regulatory compliance, which includes anti-corruption training for all relevant employees.

Throughout the COVID-19 pandemic, Snap-on has generally maintained its headcount and has accommodated its operations to the virus environment.

Refer to the “Impact of the COVID-19” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information on actions taken by the company in response to the COVID-19 pandemic.

Social Responsibility

Snap-on is committed to conducting business and making decisions honestly, ethically, fairly and within the law, and is guided by the company’s mission statement.

Social Responsibility and Sustainability Commitment

Snap-on is deeply dedicated to honoring and celebrating the dignity of work.

The company supports upskilling the workforce through collaborations with Career and Technical Education (CTE) schools across the United States and throughout the world, and with SkillsUSA and World Skills to engage youth in order to enable and promote technical careers.

Additionally, the company is a founding partner of the National Coalition of Certification Centers (NC3), which aims to more effectively match technical school curricula with the precise needs of the current and future workplace by developing, implementing, and sustaining industry-recognized certifications with programs in automotive, aviation, energy, oil and gas, manufacturing and other critical industries.

To date, nearly 200,000 students have earned Snap-on certifications, preparing them for successful and satisfying careers across various technical disciplines.

Snap-on is committed to conducting business and making decisions honestly, ethically, fairly and within the law, and is guided by the company’s “Who We Are” mission statement, which is translated into multiple languages and prominently displayed in our facilities around the world.

Snap-on is dedicated to earning and keeping the trust and confidence of its shareholders, customers, franchisees, distributors, retirees and associates, as well as of the communities where the company does business.

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Snap-on has adopted policies that seek to eliminate human trafficking, slavery, forced labor and child labor from its global supply chain.

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 guidelines of the Sustainability Accounting Standards Board (SASB).

Snap-on’s sustainability metrics are available on the company’s website at www.snapon.com .

SNAP-ON INCORPORATED

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.

The company has voluntarily reported Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions to the CDP (formerly known as the Carbon Disclosure Project) on an annual basis since 2008.

As reported to the CDP in 2021, the company’s total GHG emissions of 102,137 metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of 28.4 (metric tons of CO2e, divided by net sales in millions), which is 30% lower than when initially reported in 2008.

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”).

Snap-on’s SASB Index, along with additional information regarding the company’s sustainability commitment, is available in the “Investors” section on the company’s website at www.snapon.com .

Customers and Seasonality

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business