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Caution Regarding Forward-Looking Statements:
−Removed: Statements in this document that are not historical facts, including statements that:
−Removed: (i) are in the future tense;
−Removed: (ii) include the words “expects,” “plans,” “targets,” “estimates,” “believes,” “anticipates,” or similar words that reference Snap-on Incorporated (“Snap-on” or “the company”) or its management;
−Removed: (iii) are specifically identified as forward-looking;
−Removed: or (iv) describe Snap-on’s or management’s future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
+Added: Statements in this document that are not historical facts, including statements that (i) are in the future tense, (ii) include the words “expects,” “plans,” “targets,” “estimates,” “believes,” “anticipates,” or similar words that reference Snap-on Incorporated (“Snap-on” or “the company”) or its management, (iii) are specifically identified as forward-looking, or (iv) describe Snap‑on’s or management’s future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Snap-on cautions the reader that any forward-looking statements included in this document that are based upon assumptions and estimates were developed by management in good faith and are subject to risks, uncertainties or other factors that could cause (and in some cases have caused) actual results to differ materially from those described in any such statement.
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For those forward-looking statements, Snap-on cautions the reader that numerous important factors, such as those listed below, the factors discussed in its Annual Report on Form 10-K for the fiscal year ended January 1, 2022 (“2021 year end”), and those discussed in this document, could affect the company’s actual results and could cause its actual consolidated results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, Snap-on.
−Removed: These risks and uncertainties include, without limitation, uncertainties related to estimates, statements, assumptions and projections generally, and the timing and progress with which Snap-on can attain value through its Snap-on Value Creation Processes, including its ability to realize efficiencies and savings from its rapid continuous improvement and other cost reduction initiatives, improve workforce productivity, achieve improvements in the company’s manufacturing footprint and greater efficiencies in its supply chain, and enhance machine maintenance, plant productivity and manufacturing line set-up and change-over practices, any or all of which could result in production inefficiencies, higher costs and/or lost revenues.
−Removed: These risks include the evolving impact and unknown duration of the coronavirus (“COVID-19”) pandemic, which has the potential to amplify the impact of the other risks facing the company.
−Removed: These risks also include the impact of governmental actions related thereto on Snap-on’s business, as well as uncertainties related to Snap-on’s capability to implement future strategies with respect to its existing businesses, its ability to refine its brand and franchise strategies, retain and attract franchisees, further enhance service and value to franchisees and thereby help improve their sales and profitability, introduce successful new products, successfully pursue, complete and integrate acquisitions, as well as its ability to withstand disruption arising from natural disasters, planned facility closures or other labor interruptions, the effects of external negative factors, including adverse developments in world financial markets, developments related to tariffs and other trade issues or disputes, global supply chain disruptions, weakness in certain areas of the global economy (including as a result of the impact of matters related to the United Kingdom’s exit from the European Union and the COVID-19 pandemic), and significant changes in the current competitive environment, inflation, interest rates and other monetary and market fluctuations, changes in tax rates, laws and regulations as well as uncertainty surrounding potential changes, and the impact of energy and raw material supply and pricing, including steel (as a result of U.S.
−Removed: tariffs imposed on certain steel imports or otherwise) and gasoline, the amount, rate and growth of Snap-on’s general and administrative expenses, including health care and postretirement costs, continuing and potentially increasing required contributions to pension and postretirement plans, the impacts of non-strategic business and/or product line rationalizations, and the effects on business as a result of new legislation, regulations or government-related developments or issues, including governmental policy and regulatory changes to address climate change, risks associated with data security and technological systems and protections, potential reputational damages and costs related to litigation as well as an inability to assure that costs will be reduced or eliminated on appeal, the impact of changes in financial accounting standards, the ability to effectively manage human capital resources, and other world or local events outside Snap-on’s control, including terrorist disruptions and other outbreaks of infectious diseases and civil unrest.
+Added: Risks and uncertainties include, without limitation:
+Added: • The evolving impact and unknown duration of the ongoing coronavirus (“COVID-19”) pandemic, as well as the effects of governmental actions related thereto on Snap-on’s business, which has the potential to amplify the impact of the other risks facing the company;
+Added: • Uncertainties related to estimates, assumptions and projections generally;
+Added: • The timing and progress with which Snap-on can attain value through its Snap-on Value Creation Processes, including its ability to (i) realize efficiencies and savings from its rapid continuous improvement and other cost reduction initiatives, (ii) improve workforce productivity, (iii) achieve improvements in the company’s manufacturing footprint and greater efficiencies in its supply chain, and (iv) enhance machine maintenance, plant productivity and manufacturing line set-up and change-over practices, any or all of which could result in production inefficiencies, higher costs and/or lost revenues;
+Added: • Snap-on’s capability to successfully implement future strategies with respect to its existing businesses;
+Added: • Snap-on’s ability to refine its brand and franchise strategies, retain and attract franchisees, and further enhance service and value to franchisees in order to help improve the sales and profitability of franchisees;
+Added: • The company’s ability to introduce successful new products;
+Added: • Risks related to pursuing, completing and integrating acquisitions;
+Added: • Snap-on’s ability to withstand disruption arising from natural disasters, including climate-related events or other unusual occurrences, impacting our operations;
+Added: • The impact of labor interruptions or challenges;
+Added: • Snap-on’s ability to successfully manage planned facility closures or to withstand disruptions from unexpected closures;
+Added: • The effects of external economic factors, including adverse developments in world financial markets, disruptions related to tariffs and other trade issues, and global supply chain interruptions including as a result of the current war in Ukraine;
+Added: • Weakness in certain geographic areas, including as a result of armed conflicts, localized recessions, and the impact of matters related to the United Kingdom’s exit from the European Union;
+Added: • Significant changes in the current competitive environment;
+Added: • Inflation, interest rate changes and other monetary and market fluctuations;
+Added: • Changes in tax rates, laws and regulations as well as uncertainty surrounding potential changes;
+Added: • Price and supply fluctuations related to raw materials, components and certain purchased finished goods, such as steel, plastics, and electronics;
+Added: • Snap-on’s ability to successfully manage changes in prices and the availability of energy sources, including gasoline;
+Added: SNAP-ON INCORPORATED
+Added: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
+Added: OF OPERATIONS
+Added: • The amount, rate and growth of Snap-on’s general and administrative expenses, including health care and postretirement costs, and continuing and potentially increasing required contributions to pension and postretirement plans;
+Added: • The effects of new requirements, legislation, regulations or government-related developments or issues, as well as third party actions, including those addressing climate change;
+Added: • Risks associated with data security and technological systems and protections, including the effects of new legislation, regulations or government-related developments;
+Added: • Potential reputational damages and costs related to litigation;
+Added: • The ability to effectively manage human capital resources;
+Added: • Other world or local events outside Snap-on’s control, including terrorist disruptions, other outbreaks of infectious diseases and civil unrest.
Snap-on disclaims any responsibility to update any forward-looking statement provided in this document, except as required by law.
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Reported results, therefore, may appear to be volatile in certain accounting periods.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
Non-GAAP Measures
−Removed: References in this report to “organic sales” refer to sales from continuing operations calculated in accordance with GAAP, excluding acquisition-related sales and the impact of foreign currency translation.
+Added: References in this report to “organic sales” refer to sales from continuing operations calculated in accordance with GAAP, adjusted to exclude acquisition-related sales and the impact of foreign currency translation.
Management evaluates the company’s sales performance based on organic sales growth, which primarily reflects growth from the company’s existing businesses as a result of increased output, expanded customer base, geographic expansion, new product development and pricing changes, and excludes sales contributions from acquired operations the company did not own as of the comparable prior-year reporting period.
6 unchanged sentences
On July 1, 2021, Snap-on exchanged its 35% equity interest in Deville S.A., valued at $21.8 million, for 100% ownership of Secateurs Pradines (“Pradines”), a wholly owned subsidiary of Deville S.A.
−Removed: with a fair value of $20.7 million (or $16.2 million, net of cash acquired), and cash of $1.1 million, which reflects a $0.7 million working capital adjustment finalized in the third quarter of 2021.
+Added: with a fair value of $20.7 million (or $16.2 million, net of cash acquired), and cash of $1.1 million.
Pradines, located in Bauge-en-Anjou, France, designs and manufactures horticultural hand tools for professionals and individuals.
4 unchanged sentences
Dealer-FX specializes in software as a service (SaaS) management systems, communications platforms, extensive data integrations, and offers a digitalized solution that increases productivity and enhances the vehicle owners’ experience.
−Removed: The acquisition of Dealer-FX complemented and expanded Snap-on’s existing OEM and dealership business that provides electronic parts catalogs, essential tool and diagnostics programs, and custom analytics to OEMs and dealerships.
−Removed: On September 28, 2020, Snap-on acquired substantially all of the assets of AutoCrib, Inc.
−Removed: (“AutoCrib”) for a cash purchase price of $35.4 million.
−Removed: AutoCrib, based in Tustin, California, designs, manufactures and markets asset and tool control solutions.
−Removed: 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.
−Removed: 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.
−Removed: Sigmavision designs and manufactures handheld devices and drive-over ramps that provide tire information for use in the automotive industry.
−Removed: 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.
−Removed: For segment reporting purposes, the results of operations and assets of Dealer-FX and Sigmavision have been included in the Repair Systems & Information Group since the respective acquisition dates, and the results of operations and assets of AutoCrib Germany, Pradines and AutoCrib have been included in the Commercial & Industrial Group since the respective acquisition dates.
−Removed: Pro forma financial information has not been presented for these acquisitions as the net effects were neither significant nor material to Snap-on’s results of operations or financial position.
+Added: The acquisition of Dealer-FX complemented and expanded Snap-on’s existing OEM and dealership business that provides electronic parts catalogs, essential tool and diagnostic programs, and custom analytics to OEMs and dealerships.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
+Added: For segment reporting purposes, the results of operations and assets of Dealer-FX has 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.
+Added: Pro forma financial information has not been presented for these acquisitions as the net effects were neither significant nor material to Snap-on’s results of operations or financial position.
Effect of COVID-19
−Removed: During the third quarter of 2021, the effects on the company from the COVID-19 pandemic have lessened, particularly from the heavily-impacted second quarter of 2020.
+Added: Our markets and our operations possess and, indeed, have demonstrated considerable resilience against the effects of the pandemic.
The company sustained the accommodation of its operations to the virus environment, continuing without significant disruption to serve its franchisees and other professional customers as they performed their essential work, while taking what it believes to be appropriate measures to ensure the health and safety of its people.
−Removed: Throughout the pandemic, Snap-on has generally maintained its work force, manufacturing capacity, brand position and product development.
−Removed: In the first nine months of 2021, COVID-19-related costs were not significant.
−Removed: As the global supply chain inefficiencies caused by the COVID-19 pandemic have developed, the company has taken steps to ensure access to raw materials and products.
−Removed: The evolving and unpredictable nature of the pandemic environment and the related global supply chain difficulties could further impact shipping charges, product costs and lead times, raising additional operating challenges.
−Removed: Our markets and our operations have demonstrated and possess considerable resilience against the effects of the pandemic.
−Removed: The ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, including the supply chain, which are uncertain and cannot be predicted at this time.
−Removed: See Part I, Item 1A, Risk Factors in Snap-on’s 2020 Form 10-K for an additional discussion of risks related to COVID-19.
−Removed: RESULTS OF OPERATIONS
−Removed: Results of operations for the three months ended October 2, 2021, and September 26, 2020, are as follows:
−Removed: Three Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
−Removed: Net sales $ 1,037.7 100.0 % $ 941.6 100.0 % $ 96.1 10.2 %
−Removed: Cost of goods sold (517.0) (49.8) % (472.1) (50.1) % (44.9) (9.5) %
−Removed: Gross profit 520.7 50.2 % 469.5 49.9 % 51.2 10.9 %
−Removed: Operating expenses (319.4) (30.8) % (283.8) (30.2) % (35.6) (12.5) %
−Removed: Operating earnings before financial services 201.3 19.4 % 185.7 19.7 % 15.6 8.4 %
−Removed: Financial services revenue 87.3 100.0 % 85.8 100.0 % 1.5 1.7 %
−Removed: Financial services expenses (16.7) (19.1) % (20.2) (23.5) % 3.5 17.3 %
−Removed: Operating earnings from financial services 70.6 80.9 % 65.6 76.5 % 5.0 7.6 %
−Removed: Operating earnings 271.9 24.2 % 251.3 24.5 % 20.6 8.2 %
−Removed: Interest expense (13.2) (1.2) % (13.8) (1.3) % 0.6 4.3 %
−Removed: Other income (expense) – net 3.7 0.3 % 2.8 0.2 % 0.9 32.1 %
−Removed: Earnings before income taxes and equity earnings 262.4 23.3 % 240.3 23.4 % 22.1 9.2 %
−Removed: Income tax expense (60.9) (5.4) % (55.1) (5.4) % (5.8) (10.5) %
−Removed: Earnings before equity earnings 201.5 17.9 % 185.2 18.0 % 16.3 8.8 %
−Removed: Equity earnings (loss), net of tax — — (0.5) — 0.5 100.0 %
−Removed: Net earnings 201.5 17.9 % 184.7 18.0 % 16.8 9.1 %
−Removed: Net earnings attributable to noncontrolling interests (5.3) (0.5) % (5.0) (0.5) % (0.3) (6.0) %
−Removed: Net earnings attributable to Snap-on Inc.
−Removed: $ 196.2 17.4 % $ 179.7 17.5 % $ 16.5 9.2 %
−Removed: Percentage Disclosure:
−Removed: 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.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Net sales of $1,037.7 million in the third quarter of 2021 increased $96.1 million, or 10.2% from 2020 levels, reflecting a $67.0 million, or 7.0%, organic gain, $19.5 million of acquisition-related sales and $9.6 million of favorable foreign currency translation.
−Removed: Gross profit of $520.7 million in the third quarter of 2021 increased $51.2 million, or 10.9%, compared to $469.5 million last year.
−Removed: Gross margin (gross profit as a percentage of net sales) of 50.2% in the quarter improved 30 basis points (100 basis points (“bps”) equals 1.0 percent) from the third quarter of 2020 primarily due to higher sales volumes, 60 bps of favorable foreign currency effects, and benefits from the company’s “Rapid Continuous Improvement” or “RCI” initiatives, which offset higher material and other costs.
−Removed: Snap-on’s RCI initiatives employ a structured set of tools and processes across multiple businesses and geographies intended to eliminate waste and improve operations.
−Removed: 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 optimization.
−Removed: Unless individually significant, it is not practicable to disclose each RCI activity that generated savings and/or segregate RCI savings embedded in sales volume increases.
−Removed: Operating expenses of $319.4 million in the third quarter of 2021 compared to $283.8 million last year.
−Removed: Operating expenses as a percentage of net sales of 30.8% increased 60 bps from last year primarily due to 60 bps of unfavorable acquisition effects.
−Removed: Benefits from the higher sales volumes were offset by increased brand-building, travel and other costs.
−Removed: Operating earnings before financial services of $201.3 million in the third quarter of 2021 increased $15.6 million, or 8.4%, compared to $185.7 million in the third quarter of 2020.
−Removed: As a percentage of net sales, operating earnings before financial services of 19.4% compared to 19.7% last year.
−Removed: Financial services revenue of $87.3 million in the third quarter of 2021 compared to $85.8 million last year.
−Removed: Financial services operating earnings of $70.6 million in the period compared to $65.6 million in 2020.
−Removed: Operating earnings of $271.9 million in the third quarter of 2021 increased $20.6 million, or 8.2%, compared to $251.3 million last year.
−Removed: As a percentage of revenues (net sales plus financial services revenue), operating earnings of 24.2% in the quarter compared to 24.5% last year.
−Removed: Interest expense in the third quarter of 2021 decreased $0.6 million compared to last year.
−Removed: See Note 9 to the Condensed Consolidated Financial Statements for information on Snap-on’s debt and credit facilities.
−Removed: Other income (expense) – net primarily includes net gains and losses associated with hedging and currency exchange rate transactions, non-service components of net periodic benefit costs, and interest income.
−Removed: See Note 17 to the Condensed Consolidated Financial Statements for information on Other income (expense) – net.
−Removed: The 2021 third quarter effective income tax rate on earnings attributable to Snap-on was 23.7%.
−Removed: The 2020 effective income tax rate was 23.4%.
−Removed: S ee Note 8 to the Condensed Consolidated Financial Statements for information on income taxes.
−Removed: Net earnings attributable to Snap-on in the third quarter of 2021 were $196.2 million, or $3.57 per diluted share.
−Removed: Net earnings attributable to Snap-on in the third quarter of 2020 were $179.7 million, or $3.28 per diluted share.
+Added: Throughout the pandemic, Snap-on has generally maintained its workforce and manufacturing capacity, as well as its investments in brand building and product development.
+Added: As the global supply chain inefficiencies and associated cost increases caused by the COVID-19 pandemic have developed, the company has taken steps to ensure access to raw materials, components and purchased finished goods, and to provide for counterbalancing price and efficiency offsets.
+Added: See also Part I, Item 1A:
+Added: Risk Factors in Snap-on’s 2021 Form 10-K for an additional discussion of risks related to COVID-19 and Other Infectious Diseases.
+Added: Recent Security Incident
+Added: In early March 2022, Snap-on detected unusual activity in some areas of its information technology environment and quickly took down its network connections as part of the company’s defense protocols.
+Added: The company launched a comprehensive analysis assisted by a leading external forensics firm, identified the event as a security incident, and notified law enforcement of the incursion.
+Added: The company continued to pursue its commercial activities and restored connections as system interfaces were cleared.
+Added: As of the date of this disclosure, substantially all impacted systems have been restored.
+Added: The incident did not significantly affect the company’s financial results during the first quarter of 2022.
SNAP-ON INCORPORATED
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OF OPERATIONS
−Removed: Results of operations for the nine months ended October 2, 2021, and September 26, 2020, are as follows:
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
+Added: RESULTS OF OPERATIONS
+Added: Results of operations for the three months ended April 2, 2022, and April 3, 2021, are as follows:
+Added: Three Months Ended
+Added: (Amounts in millions) April 2, 2022 April 3, 2021 Change
Net sales $ 1,097.8 100.0 % $ 1,024.6 100.0 % $ 73.2 7.1 %
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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.
−Removed: Net sales of $3,143.7 million in the first nine months of 2021 increased $625.6 million, or 24.8% from 2020 levels, reflecting a $525.8 million, or 20.5%, organic gain, $50.4 million of acquisition-related sales and $49.4 million of favorable foreign currency translation.
−Removed: Gross profit of $1,577.4 million in the first nine months of 2021 increased $345.1 million, or 28.0%, compared to $1,232.3 million last year.
−Removed: Gross margin of 50.2% in the first nine months of 2021 improved 130 basis points from last year primarily due to higher sales volumes, 30 bps from lower costs related to $7.1 million of exit and disposal activities recorded last year and benefits from the company’s RCI initiatives.
−Removed: Operating expenses of $958.1 million in the first nine months of 2021 compared to $816.6 million in 2020.
−Removed: Operating expenses as a percentage of net sales of 30.5% improved 190 bps from last year primarily due to higher sales volumes and 20 bps from lower costs related to $4.4 million of restructuring actions recorded in 2020.
−Removed: These items were partially offset by costs associated with higher stock-based expenses and by 60 bps of unfavorable acquisition effects.
−Removed: Operating earnings before financial services of $619.3 million in the first nine months of 2021 increased $203.6 million, or 49.0%, compared to $415.7 million in 2020, which included $11.5 million of charges for restructuring actions.
−Removed: As a percentage of net sales, operating earnings before financial services of 19.7% improved 320 bps from 16.5% last year, which included 50 bps of costs from restructuring actions.
−Removed: Financial services revenue of $262.8 million in the first nine months of 2021 compared to $256.3 million last year.
−Removed: Financial services operating earnings of $204.8 million in the period compared to $180.1 million in 2020.
+Added: Net sales of $1,097.8 million in the first quarter of 2022 increased $73.2 million, or 7.1%, from 2021 levels, reflecting an $80.4 million, or 8.0%, organic gain and $8.5 million of acquisition-related sales, partially offset by $15.7 million of unfavorable foreign currency translation.
+Added: Gross profit of $534.3 million in the first quarter of 2022 increased $20.7 million, or 4.0%, compared to $513.6 million last year.
+Added: Gross margin (gross profit as a percentage of net sales) of 48.7% in the quarter declined 140 basis points (100 basis points (“bps”) equals 1.0 percent) from the first quarter of 2021 primarily due to higher material and other costs, partially offset by higher sales volumes, pricing actions, benefits from the company’s “Rapid Continuous Improvement” or “RCI” initiatives and 30 bps of favorable foreign currency effects.
+Added: Snap-on’s RCI initiatives employ a structured set of tools and processes across multiple businesses and geographies intended to eliminate waste and improve operations.
+Added: 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.
+Added: Unless individually significant, it is not practicable to disclose each RCI activity that generated savings and/or segregate RCI savings embedded in sales volume increases.
+Added: Operating expenses of $311.2 million in the first quarter of 2022 compared to $312.7 million last year.
+Added: Operating expenses as a percentage of net sales of 28.4% improved 210 bps from last year primarily due to the higher sales volumes, savings from RCI initiatives, and lower costs associated with stock-based expenses;
+Added: these improvements were partially offset by 40 bps of unfavorable acquisition effects.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: Operating earnings of $824.1 million in the first nine months of 2021 increased $228.3 million, or 38.3%, compared to $595.8 million last year, which included $11.5 million of charges for restructuring actions.
−Removed: As a percentage of revenues, operating earnings of 24.2% compared to 21.5% last year, which included 40 bps of costs from restructuring actions.
−Removed: Interest expense in the first nine months of 2021 increased $3.2 million compared to last year.
+Added: Operating earnings before financial services of $223.1 million in the first quarter of 2022 increased $22.2 million, or 11.1%, compared to $200.9 million in the first quarter of 2021.
+Added: As a percentage of net sales, operating earnings before financial services of 20.3% compared to 19.6% last year.
+Added: Financial services revenue of $87.7 million in the first quarter of 2022 compared to $88.6 million last year.
+Added: Financial services operating earnings of $70.4 million in the period compared to $65.3 million in 2021.
+Added: Operating earnings of $293.5 million in the first quarter of 2022 increased $27.3 million, or 10.3%, compared to $266.2 million last year.
+Added: As a percentage of revenues (net sales plus financial services revenue), operating earnings of 24.8% in the quarter compared to 23.9% last year.
+Added: Interest expense in the first quarter of 2022 decreased $2.7 million compared to last year.
See Note 9 to the Condensed Consolidated Financial Statements for information on Snap-on’s debt and credit facilities.
1 unchanged sentence
See Note 17 to the Condensed Consolidated Financial Statements for information on Other income (expense) – net.
−Removed: In the first nine months of 2021, Snap-on’s effective income tax rate on earnings attributable to Snap-on was 23.5%.
−Removed: The 2020 effective income tax rate was 23.8%, which included a 10 bps increase related to the restructuring actions.
+Added: Snap-on’s effective income tax rate on earnings attributable to Snap-on was 23.7% in the first quarter of 2022 and 23.5% in the first quarter of 2021.
S ee Note 8 to the Condensed Consolidated Financial Statements for information on income taxes.
−Removed: Net earnings attributable to Snap-on in the first nine months of 2021 were $596.8 million, or $10.83 per diluted share.
−Removed: Net earnings attributable to Snap-on in the first nine months of 2020 were $418.1 million, or $7.62 per diluted share, which included a $9.3 million, or $0.17 per diluted share, after-tax charge related to the restructuring actions.
−Removed: Exit and Disposal Activities
−Removed: Snap-on did not record any costs for exit and disposal activities in the three and nine month periods ended October 2, 2021, or in the three month period ended September 26, 2020.
−Removed: For the nine month period ended September 26, 2020, Snap-on recorded costs of $11.5 million for exit and disposal activities, all of which occurred in the six months ended June 27, 2020.
−Removed: See Note 7 to the Condensed Consolidated Financial Statements for information on Snap-on’s exit and disposal activities.
+Added: Net earnings attributable to Snap-on in the first quarter of 2022 were $217.4 million, or $4.00 per diluted share.
+Added: Net earnings attributable to Snap-on in the first quarter of 2021 were $192.6 million, or $3.50 per diluted share.
Segment Results
7 unchanged sentences
The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s worldwide mobile tool distribution channel.
−Removed: 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 dealership service and repair shops (“OEM dealerships”), through direct and distributor channels.
+Added: 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.
Financial Services consists of the business operations of Snap-on’s finance subsidiaries.
9 unchanged sentences
Three Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
−Removed: External net sales $ 271.7 77.3 % $ 235.7 76.4 % $ 36.0 15.3 %
−Removed: Intersegment net sales 79.7 22.7 % 72.7 23.6 % 7.0 9.6 %
−Removed: Segment net sales 351.4 100.0 % 308.4 100.0 % 43.0 13.9 %
−Removed: Cost of goods sold (217.3) (61.8) % (193.5) (62.7) % (23.8) (12.3) %
−Removed: Gross profit 134.1 38.2 % 114.9 37.3 % 19.2 16.7 %
−Removed: Operating expenses (80.5) (22.9) % (71.8) (23.3) % (8.7) (12.1) %
−Removed: Segment operating earnings $ 53.6 15.3 % $ 43.1 14.0 % $ 10.5 24.4 %
−Removed: Segment net sales of $351.4 million in the third quarter of 2021 increased $43.0 million, or 13.9% from 2020 levels, reflecting a $32.9 million, or 10.6%, organic sales increase, $7.5 million of acquisition-related sales and $2.6 million of favorable foreign currency translation.
−Removed: The organic gain reflects higher activity in all of the segment’s operations and includes high single-digit increases in sales to customers in critical industries.
−Removed: Segment gross margin in the third quarter of 38.2% improved 90 bps from last year, primarily due to increased sales volumes and benefits from RCI initiatives, partially offset by higher material and other costs.
−Removed: Segment operating expenses as a percentage of sales in the third quarter of 22.9% improved 40 bps as compared to 2020 primarily reflecting the higher sales, partially offset by increased travel and other costs.
−Removed: As a result of these factors, segment operating earnings of $53.6 million in the third quarter of 2021, including $0.1 million of unfavorable foreign currency effects, increased $10.5 million, or 24.4%, compared to $43.1 million in 2020.
−Removed: Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.3% in the third quarter of 2021 compared to 14.0% in 2020.
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
+Added: (Amounts in millions) April 2, 2022 April 3, 2021 Change
External net sales $ 261.2 76.8 % $ 271.1 78.4 % $ (9.9) (3.7) %
5 unchanged sentences
Segment operating earnings $ 45.7 13.4 % $ 50.7 14.7 % $ (5.0) (9.9) %
−Removed: Segment net sales of $1,047.6 million in the first nine months of 2021 increased $177.4 million, or 20.4% from 2020 levels, reflecting a $133.5 million, or 15.0%, organic sales increase, $22.5 million of acquisition-related sales and $21.4 million of favorable foreign currency translation.
−Removed: The organic gain reflects higher activity in all of the segment’s operations and includes high single-digit increases in sales to customers in critical industries.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Segment gross margin in the first nine months of 38.8% improved 250 bps from last year, primarily due to benefits from higher sales volumes and 70 bps from lower costs related to $6.4 million of restructuring actions recorded in 2020, partially offset by 40 bps of unfavorable foreign currency effects.
−Removed: Segment operating expenses as a percentage of sales in the first nine months of 23.5% improved 160 bps as compared to 2020 primarily reflecting the higher sales.
−Removed: As a result of these factors, segment operating earnings of $159.8 million in the first nine months of 2021, including $2.6 million of unfavorable foreign currency effects, increased $62.3 million, or 63.9%, compared to $97.5 million in 2020, which included $6.4 million of restructuring charges.
−Removed: Operating margin for the Commercial & Industrial Group of 15.3% in the first nine months of 2021 compared to 11.2% in 2020.
+Added: Segment net sales of $340.1 million in the first quarter of 2022 decreased $5.6 million, or 1.6%, from 2021 levels, reflecting a $3.6 million, or 1.1%, organic sales increase, which was more than offset by $9.2 million of unfavorable foreign currency translation.
+Added: The organic gain primarily reflects a double-digit increase in the segment’s Asia Pacific operations, partially offset by a mid single-digit decline in sales to customers in critical industries, where lower activity with the military more than offset higher sales to general industry and technical education customers.
+Added: Segment gross margin in the first quarter of 36.4% declined 230 bps from last year, primarily due to higher material and other costs and 40 bps of unfavorable foreign currency effects, partially offset by benefits from pricing actions and the segment’s RCI initiatives.
+Added: Segment operating expenses as a percentage of sales in the first quarter of 23.0% improved 100 bps as compared to 2021 primarily reflecting savings from cost containment actions and 10 basis points of favorable foreign currency effects.
+Added: As a result of these factors, segment operating earnings of $45.7 million in the first quarter of 2022, including $2.2 million of unfavorable foreign currency effects, decreased $5.0 million, or 9.9%, compared to $50.7 million in 2021.
+Added: Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 13.4% in the first quarter of 2022 compared to 14.7% in 2021.
Snap-on Tools Group
Three Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
−Removed: Segment net sales $ 471.4 100.0 % $ 449.8 100.0 % $ 21.6 4.8 %
−Removed: Cost of goods sold (255.5) (54.2) % (245.3) (54.5) % (10.2) (4.2) %
−Removed: Gross profit 215.9 45.8 % 204.5 45.5 % 11.4 5.6 %
−Removed: Operating expenses (117.7) (25.0) % (117.4) (26.1) % (0.3) (0.3) %
−Removed: Segment operating earnings $ 98.2 20.8 % $ 87.1 19.4 % $ 11.1 12.7 %
−Removed: Segment net sales of $471.4 million in the third quarter of 2021 increased $21.6 million, or 4.8% from 2020 levels, reflecting a $16.7 million, or 3.7%, organic sales gain and $4.9 million of favorable foreign currency translation.
−Removed: The organic increase reflects a mid single-digit gain in the U.S.
−Removed: franchise business and a low single-digit increase in the segment’s international operations.
−Removed: Segment gross margin in the third quarter of 45.8% improved 30 bps from last year primarily due to increased sales volumes and 130 bps of favorable foreign currency effects, which offset higher material and other costs.
−Removed: Segment operating expenses as a percentage of net sales in the third quarter of 25.0% improved 110 bps from last year primarily reflecting the higher sales, partially offset by increased travel and other costs.
−Removed: As a result of these factors, segment operating earnings of $98.2 million in the third quarter of 2021, including $7.5 million of favorable foreign currency effects, increased $11.1 million, or 12.7%, compared to $87.1 million in 2020.
−Removed: Operating margin for the Snap-on Tools Group of 20.8% in the third quarter of 2021 compared to 19.4% last year.
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
+Added: (Amounts in millions) April 2, 2022 April 3, 2021 Change
Segment net sales $ 512.1 100.0 % $ 478.3 100.0 % $ 33.8 7.1 %
3 unchanged sentences
Segment operating earnings $ 116.0 22.7 % $ 98.9 20.7 % $ 17.1 17.3 %
−Removed: Segment net sales of $1,433.8 million in the first nine months of 2021 increased $284.8 million, or 24.8% from 2020 levels, reflecting a $266.5 million, or 22.8%, organic sales gain and $18.3 million of favorable foreign currency translation.
−Removed: The organic increase reflects double-digit gains in both the U.S.
−Removed: and international operations.
+Added: Segment net sales of $512.1 million in the first quarter of 2022 increased $33.8 million, or 7.1%, from 2021 levels, reflecting a $36.8 million, or 7.7%, organic sales gain, partially offset by $3.0 million of unfavorable foreign currency translation.
+Added: The organic increase is due to a double-digit gain in the U.S.
+Added: franchise business, partially offset by a low single-digit decline in the segment’s international operations.
+Added: Segment gross margin in the first quarter of 45.5% declined 40 bps from last year primarily due to increased material and other costs, which were mostly offset by benefits from the higher sales volumes, pricing actions and 30 bps of favorable foreign currency effects.
+Added: Segment operating expenses as a percentage of net sales in the first quarter of 22.8% improved 240 bps from last year primarily due to the impact of higher sales volumes, savings from RCI initiatives, and lower stock-based expenses related to the company’s franchisee stock purchase plan.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: Segment gross margin in the first nine months of 46.2% improved 270 bps from last year primarily due to higher sales volumes, benefits from RCI initiatives, and 70 bps of favorable foreign currency effects.
−Removed: Segment operating expenses as a percentage of net sales in the first nine months of 25.2% improved 310 bps from last year primarily reflecting the higher sales, partially offset by higher stock-based expenses related to the company’s franchisee stock purchase plan.
−Removed: As a result of these factors, segment operating earnings of $300.6 million in the first nine months of 2021, including $13.4 million of favorable foreign currency effects, increased $126.5 million, or 72.7%, compared to $174.1 million in 2020.
−Removed: Operating margin for the Snap-on Tools Group of 21.0% in the first nine months of 2021 compared to 15.2% last year.
+Added: As a result of these factors, segment operating earnings of $116.0 million in the first quarter of 2022, including $0.8 million of favorable foreign currency effects, increased $17.1 million, or 17.3%, compared to $98.9 million in 2021.
+Added: Operating margin for the Snap-on Tools Group of 22.7% in the first quarter of 2022 compared to 20.7% last year.
Repair Systems & Information Group
Three Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
−Removed: External net sales $ 294.6 80.8 % $ 256.1 80.7 % $ 38.5 15.0 %
−Removed: Intersegment net sales 69.8 19.2 % 61.4 19.3 % 8.4 13.7 %
−Removed: Segment net sales 364.4 100.0 % 317.5 100.0 % 46.9 14.8 %
−Removed: Cost of goods sold (193.7) (53.2) % (167.4) (52.7) % (26.3) (15.7) %
−Removed: Gross profit 170.7 46.8 % 150.1 47.3 % 20.6 13.7 %
−Removed: Operating expenses (87.4) (23.9) % (70.0) (22.1) % (17.4) (24.9) %
−Removed: Segment operating earnings $ 83.3 22.9 % $ 80.1 25.2 % $ 3.2 4.0 %
−Removed: Segment net sales of $364.4 million in the third quarter of 2021 increased $46.9 million, or 14.8% from 2020 levels, reflecting a $31.7 million, or 9.9%, organic sales increase, $12.0 million of acquisition-related sales and $3.2 million of favorable foreign currency translation.
−Removed: The organic gain reflects double-digit increases in sales of undercar equipment and in sales of diagnostic and repair information products to independent repair shop owners and managers, while the activity focused on OEM dealerships was essentially flat.
−Removed: Segment gross margin in the third quarter of 46.8% declined 50 bps from last year primarily due to the impact of higher sales in lower gross margin businesses, increased material and other costs, and 10 bps of unfavorable foreign currency effects.
−Removed: These declines were partially offset by savings from RCI initiatives and 60 bps of benefits from acquisitions.
−Removed: Segment operating expenses as a percentage of net sales in the third quarter of 23.9%, increased 180 bps from 2020 primarily due to 170 bps of unfavorable acquisition effects in 2021.
−Removed: As a result of these factors, segment operating earnings of $83.3 million in the third quarter of 2021, including $0.7 million of favorable foreign currency effects, increased $3.2 million, or 4.0%, from $80.1 million in 2020.
−Removed: Operating margin for the Repair Systems & Information Group of 22.9% in the third quarter of 2021 compared to 25.2% last year.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
+Added: (Amounts in millions) April 2, 2022 April 3, 2021 Change
External net sales $ 324.5 81.5 % $ 275.2 79.2 % $ 49.3 17.9 %
5 unchanged sentences
Segment operating earnings $ 91.6 23.0 % $ 81.4 23.4 % $ 10.2 12.5 %
−Removed: Segment net sales of $1,110.6 million in the first nine months of 2021 increased $233.5 million, or 26.6% from 2020 levels, reflecting a $191.6 million, or 21.5%, organic sales increase, $27.9 million of acquisition-related sales and $14.0 million of favorable foreign currency translation.
−Removed: The organic gain reflects an increase of over 30% in sales of undercar equipment, as well as mid-teen gains in both sales of diagnostic and repair information products to independent repair shop owners and managers and in the activity focused on OEM dealerships.
−Removed: Segment gross margin in the first nine months of 45.8% declined 170 bps from last year primarily due to the impact of higher sales in lower gross margin businesses, increased material and other costs, and 40 bps of unfavorable foreign currency effects.
−Removed: These declines were partially offset by 50 bps of benefits from acquisitions.
−Removed: Segment operating expenses as a percentage of net sales in the first nine months of 23.2%, improved 60 bps from 2020 primarily due to higher sales volumes and 40 bps from lower costs related to $3.8 million of restructuring actions recorded in 2020, partially offset by 150 bps of unfavorable acquisition effects.
−Removed: As a result of these factors, segment operating earnings of $251.4 million in the first nine months of 2021, including $1.9 million of unfavorable foreign currency effects, increased $43.4 million, or 20.9%, from $208.0 million in 2020, which included $4.5 million of restructuring charges.
−Removed: Operating margin for the Repair Systems & Information Group of 22.6% in the first nine months of 2021 compared to 23.7% last year.
+Added: Segment net sales of $398.2 million in the first quarter of 2022 increased $50.6 million, or 14.6%, from 2021 levels, reflecting a $45.7 million, or 13.3%, organic sales increase and $8.5 million of acquisition-related sales, partially offset by $3.6 million of unfavorable foreign currency translation.
+Added: The organic gain is comprised of double-digit increases in sales of undercar equipment and in activity with OEM dealerships, as well as a low single-digit gain in sales of diagnostic and repair information products to independent repair shop owners and managers.
+Added: Segment gross margin in the first quarter of 44.6% declined 140 bps from last year primarily due to increased sales in lower gross margin businesses and higher material and other costs.
+Added: These declines were partially offset by benefits from pricing actions and 50 bps from acquisitions, as well as from 30 bps of favorable foreign currency effects and savings from RCI initiatives.
+Added: Segment operating expenses as a percentage of net sales in the first quarter of 21.6%, improved 100 bps from 2021 primarily due to the benefits from sales volume leverage, including higher volumes in lower expense businesses, and savings from RCI initiatives;
+Added: these improvements were partially offset by 110 bps of unfavorable acquisition effects in 2022.
+Added: As a result of these factors, segment operating earnings of $91.6 million in the first quarter of 2022, including $0.9 million of favorable foreign currency effects, increased $10.2 million, or 12.5%, from $81.4 million in 2021.
+Added: Operating margin for the Repair Systems & Information Group of 23.0% in the first quarter of 2022 compared to 23.4% last year.
Financial Services
Three Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
−Removed: Financial services revenue $ 87.3 100.0 % $ 85.8 100.0 % $ 1.5 1.7 %
−Removed: Financial services expenses (16.7) (19.1) % (20.2) (23.5) % 3.5 17.3 %
−Removed: Segment operating earnings $ 70.6 80.9 % $ 65.6 76.5 % $ 5.0 7.6 %
−Removed: Financial services revenue in the third quarter of 2021 increased $1.5 million, or 1.7%, from 2020, primarily due to growth in the company’s financial services portfolio.
−Removed: In the third quarters of both 2021 and 2020, the average yield on finance receivables was 17.8%.
−Removed: In the third quarters of 2021 and 2020, the respective average yields on contract receivables were 8.5% and 8.4%.
−Removed: Originations of $269.3 million in the third quarter of 2021 increased $16.5 million, or 6.5%, from 2020 levels.
−Removed: Financial services expenses primarily include personnel-related and other general and administrative costs, as well as provision for credit losses.
−Removed: 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.
−Removed: Financial services expenses in the third quarter of 2021 decreased primarily due to lower provision for credit losses compared to the third quarter of 2020.
−Removed: As a percentage of the average financial services portfolio, financial services expenses were 0.8% in the third quarter of 2021 and 0.9% in the 2020 period.
−Removed: Financial services operating earnings in the third quarter of 2021, including $0.4 million of favorable foreign currency effects, increased $5.0 million, or 7.6%, from 2020 levels.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 2, 2021 September 26, 2020 Change
+Added: (Amounts in millions) April 2, 2022 April 3, 2021 Change
Financial services revenue $ 87.7 100.0 % $ 88.6 100.0 % $ (0.9) (1.0) %
1 unchanged sentence
Segment operating earnings $ 70.4 80.3 % $ 65.3 73.7 % $ 5.1 7.8 %
−Removed: Financial services revenue in the first nine months of 2021 increased $6.5 million, or 2.5%, from 2020, primarily due to $7.4 million from growth in the company’s financial services portfolio, partially offset by a $0.9 million decrease from lower average portfolio yields.
−Removed: In the first nine months of 2021 and 2020, the respective average yields on finance receivables were 17.6% and 17.7%.
−Removed: In the first nine months of both 2021 and 2020, the average yield on contract receivables was 8.5%.
−Removed: Originations of $816.9 million in the first nine months of 2021 increased $52.7 million, or 6.9%, from 2020 levels.
−Removed: Financial services expenses in the first nine months of 2021 decreased primarily due to lower provision for credit losses compared to 2020, which included a $2.6 million charge related to higher credit reserves resulting from the economic uncertainty associated with the COVID-19 pandemic.
−Removed: As a percentage of the average financial services portfolio, financial services expenses were 2.6% in the first nine months of 2021 and 3.5% in the 2020 period.
−Removed: Financial services operating earnings in the first nine months of 2021, including $2.1 million of favorable foreign currency effects, increased $24.7 million, or 13.7%, from 2020 levels.
−Removed: Snap-on’s third quarter 2021 general corporate expenses of $33.8 million compared to $24.6 million last year.
−Removed: The year-over-year increase in general corporate expenses primarily reflects higher performance-based compensation and brand-building costs.
−Removed: Snap-on’s general corporate expenses in the first nine months of 2021 of $92.5 million compared to $63.9 million last year.
−Removed: The year-over-year increase primarily reflects higher stock-based and performance-based compensation, including costs associated with the company’s employee stock purchase plan, and increased brand-building expenses.
+Added: Financial services revenue is generally dependent on the size of the average financial services portfolio during the period, as well as on the average yield on receivables in the period.
+Added: Financial services revenue in the first quarter of 2022 decreased $0.9 million, or 1.0%, from 2021, primarily due to a decline in the size of the average financial services portfolio during the quarter as compared to last year.
+Added: In both the first quarters of 2022 and 2021, the average yield on finance receivables was 17.6%.
+Added: In the first quarters of 2022 and 2021, the respective average yields on contract receivables were 8.5% and 8.4%.
+Added: Originations of $245.6 million in the first quarter of 2022 decreased $16.2 million, or 6.2%, from 2021 levels.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
+Added: Financial services expenses primarily include personnel-related and other general and administrative costs, as well as provisions for credit losses.
+Added: 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.
+Added: Financial services expenses in the first quarter of 2022 decreased primarily due to lower provisions for credit losses as compared to those recorded in the first quarter of 2021.
+Added: As a percentage of the average financial services portfolio, financial services expenses were 0.8% in the first quarter of 2022 and 1.1% in 2021.
+Added: Financial services operating earnings in the first quarter of 2022, including $0.2 million of unfavorable foreign currency effects, increased $5.1 million, or 7.8%, from 2021 levels.
+Added: Snap-on’s first quarter 2022 general corporate expenses of $30.2 million compared to $30.1 million last year.
+Added: Lower stock-based compensation, including costs associated with the company’s employee stock purchase plan, was offset by other cost increases.
Non-GAAP Supplemental Data
−Removed: 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 Incorporated’s (“Snap-on”) non-financial services (“Operations”) and “Financial Services” businesses.
−Removed: The supplemental Operations data reflects the results of operations and financial position of Snap-on’s tools, diagnostic and equipment products, software and other non-financial services operations with Financial Services presented on the equity method.
+Added: 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.
+Added: The supplemental Operations data reflects the results of operations and financial position of Snap-on’s tools, diagnostics, equipment products, software, and other non-financial services operations with Financial Services presented on the equity method.
The supplemental Financial Services data reflects the results of operations and financial position of Snap-on’s U.S.
5 unchanged sentences
Transactions between the Operations and Financial Services businesses are eliminated to arrive at the Condensed Consolidated Financial Statements.
−Removed: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the three months ended October 2, 2021, and September 26, 2020, are as follows:
−Removed: Operations* Financial Services
−Removed: (Amounts in millions) October 2, 2021 September 26,
−Removed: 2020 October 2, 2021 September 26,
−Removed: Net sales $ 1,037.7 $ 941.6 $ — $ —
−Removed: Cost of goods sold (517.0) (472.1) — —
−Removed: Gross profit 520.7 469.5 — —
−Removed: Operating expenses (319.4) (283.8) — —
−Removed: Operating earnings before financial services 201.3 185.7 — —
−Removed: Financial services revenue — — 87.3 85.8
−Removed: Financial services expenses — — (16.7) (20.2)
−Removed: Operating earnings from financial services — — 70.6 65.6
−Removed: Operating earnings 201.3 185.7 70.6 65.6
−Removed: Interest expense (13.2) (13.8) — —
−Removed: Intersegment interest income (expense) – net 13.6 16.5 (13.6) (16.5)
−Removed: Other income (expense) – net 3.7 2.8 — —
−Removed: Earnings before income taxes and equity earnings 205.4 191.2 57.0 49.1
−Removed: Income tax expense (47.1) (42.4) (13.8) (12.7)
−Removed: Earnings before equity earnings 158.3 148.8 43.2 36.4
−Removed: Financial services – net earnings attributable to Snap-on 43.2 36.4 — —
−Removed: Equity earnings (loss), net of tax — (0.5) — —
−Removed: Net earnings 201.5 184.7 43.2 36.4
−Removed: Net earnings attributable to noncontrolling interests (5.3) (5.0) — —
−Removed: Net earnings attributable to Snap-on $ 196.2 $ 179.7 $ 43.2 $ 36.4
−Removed: * Snap-on with Financial Services presented on the equity method.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the nine months ended October 2, 2021, and September 26, 2020, is as follows:
+Added: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the three months ended April 2, 2022, and April 3, 2021, are as follows:
Operations* Financial Services
−Removed: (Amounts in millions) October 2, 2021 September 26,
−Removed: 2020 October 2, 2021 September 26,
+Added: (Amounts in millions) April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021
Net sales $ 1,097.8 $ 1,024.6 $ — $ —
22 unchanged sentences
OF OPERATIONS
−Removed: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Balance Sheet information as of October 2, 2021, and January 2, 2021, is as follows:
+Added: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Balance Sheet information as of April 2, 2022, and January 1, 2022, is as follows:
Operations* Financial Services
−Removed: (Amounts in millions) October 2, 2021 January 2, 2021 October 2, 2021 January 2, 2021
+Added: (Amounts in millions) April 2,
+Added: 2022 January 1, 2022 April 2
+Added: 2022 January 1, 2022
Current assets:
22 unchanged sentences
OF OPERATIONS
−Removed: Non-GAAP Supplemental Consolidating Data – Condensed Balance Sheets Information (continued):
+Added: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Balance Sheets Information (continued):
Operations* Financial Services
−Removed: (Amounts in millions) October 2, 2021 January 2, 2021 October 2, 2021 January 2, 2021
+Added: (Amounts in millions) April 2,
+Added: 2022 January 1, 2022 April 2,
+Added: 2022 January 1, 2022
LIABILITIES AND EQUITY
Current liabilities:
−Removed: Notes payable and current maturities of long-term debt
+Added: Notes payable
$ 19.6 $ 17.4 $ — $ —
25 unchanged sentences
Due to Snap-on’s credit rating over the years, external funds have been available at an acceptable cost.
−Removed: As of October 15, 2021, Snap-on’s long-term debt and commercial paper were rated, respectively, A2 and P-1 by Moody’s Investors Service;
+Added: As of April 15, 2022, 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;
1 unchanged sentence
Snap-on believes that its current credit arrangements are sound and that the strength of its balance sheet affords the company the financial flexibility, including through access to financial markets for potential new financing, to respond to both internal growth opportunities and those available through acquisitions.
−Removed: However, in light of the on-going macroeconomic uncertainty caused by the COVID-19 pandemic, Snap-on cannot provide any assurance that financing will be available in the future on acceptable terms, or that its debt ratings will not decrease.
+Added: However, Snap-on cannot provide any assurance that financing will be available in the future on acceptable terms, or that its debt ratings will not decrease.
The following discussion focuses on information included in the accompanying Condensed Consolidated Balance Sheets.
−Removed: As of October 2, 2021, working capital (current assets less current liabilities) of $1,994.6 million increased $76.5 million from $1,918.1 million as of January 2, 2021 (fiscal 2020 year-end) primarily as a result of the net changes discussed below.
−Removed: The following represents the company’s working capital position as of October 2, 2021, and January 2, 2021:
−Removed: (Amounts in millions) October 2, 2021 January 2, 2021
+Added: As of April 2, 2022, working capital (current assets less current liabilities) of $2,211.9 million increased $140.7 million from $2,071.2 million as of January 1, 2022 (fiscal 2021 year end), primarily as a result of the net changes discussed below.
+Added: The following represents the company’s working capital position as of April 2, 2022, and January 1, 2022:
+Added: (Amounts in millions) April 2, 2022 January 1, 2022
Cash and cash equivalents $ 861.1 $ 780.0
5 unchanged sentences
Total current assets 3,236.0 3,053.4
−Removed: Notes payable and current maturities of long-term debt (17.4) (268.5)
+Added: Notes payable (19.6) (17.4)
Accounts payable (297.3) (277.6)
2 unchanged sentences
Working capital $ 2,211.9 $ 2,071.2
−Removed: Cash and cash equivalents of $735.5 million as of October 2, 2021, decreased $187.9 million from 2020 year-end levels primarily due to:
−Removed: (i) the funding of $662.6 million of new finance receivables;
−Removed: (ii) the repurchase of 1,588,900 shares of the company’s common stock for $355.8 million;
−Removed: (iii) the September 2021 repayment of $250 million of long-term notes at maturity (“the 2021 Notes”);
−Removed: (iv) the funding of $199.7 million for acquisitions;
−Removed: (v) dividend payments to shareholders of $199.7 million;
−Removed: and (vi) the funding of $53.8 million of capital expenditures.
−Removed: These decreases in cash and cash equivalents were partially offset by:
−Removed: (i) $743.9 million of cash generated from operations;
−Removed: (ii) $648.4 million of cash from collections of finance receivables;
+Added: Cash and cash equivalents of $861.1 million as of April 2, 2022, increased $81.1 million from 2021 year-end levels primarily due to:
+Added: (i) $215.6 million of cash from collections of finance receivables;
+Added: (ii) $193.9 million of cash generated from operations;
(iii) $5.8 million of cash proceeds from stock purchase and option plan exercises;
and (iv) $2.3 million of net proceeds from other short-term borrowings.
−Removed: Of the $735.5 million of cash and cash equivalents as of October 2, 2021, $273.4 million was held outside of the United States.
+Added: These increases in cash and cash equivalents were partially offset by:
+Added: (i) the funding of $205.5 million of new finance receivables;
+Added: (ii) dividend payments to shareholders of $75.7 million;
+Added: (iii) the repurchase of 136,000 shares of the company’s common stock for $28.8 million;
+Added: and (iv) the funding of $20.2 million of capital expenditures.
+Added: Of the $861.1 million of cash and cash equivalents as of April 2, 2022, $286.2 million was held outside of the United States.
Snap-on maintains non-U.S.
9 unchanged sentences
OF OPERATIONS
−Removed: Trade and other accounts receivable – net of $653.2 million as of October 2, 2021, increased $12.5 million from 2020 year-end levels, primarily due to higher sales and $9.5 million from acquisitions, partially offset by $8.5 million of foreign currency translation.
−Removed: 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 56 days at October 2, 2021, and 64 days at January 2, 2021.
−Removed: The current portions of net finance and contract receivables of $662.6 million as of October 2, 2021, compared to $642.7 million at 2020 year end.
−Removed: The long-term portions of net finance and contract receivables of $1,490.5 million as of October 2, 2021, compared to $1,511.0 million at 2020 year end.
−Removed: The combined $0.6 million decrease in net current and long-term finance and contract receivables over 2020 year-end levels primarily reflects increases from originations, more than offset by collections and $2.2 million of foreign currency translation.
−Removed: Inventories – net of $789.6 million as of October 2, 2021, increased $43.1 million from 2020 year-end levels primarily to support higher customer demand, new product innovation and $2.9 million from acquisitions, partially offset by $11.3 million of foreign currency translation.
−Removed: 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 2.7 turns and 2.4 turns as of October 2, 2021, and January 2, 2021, respectively.
−Removed: Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 59% and 57% of total inventories as of October 2, 2021 and January 2, 2021, respectively.
+Added: Trade and other accounts receivable – net of $731.3 million as of April 2, 2022, increased $49.0 million from 2021 year-end levels, primarily due to higher sales and $0.1 million of foreign currency translation.
+Added: 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 at April 2, 2022, and 58 days at January 1, 2022.
+Added: The current portions of net finance and contract receivables of $644.8 million as of April 2, 2022, compared to $652.7 million at 2021 year end.
+Added: The long-term portions of net finance and contract receivables of $1,476.8 million as of April 2, 2022, compared to $1,492.2 million at 2021 year end.
+Added: The combined $23.3 million decrease in net current and long-term finance and contract receivables over 2021 year-end levels is primarily due to an increase in net collections, partially offset by $2.9 million of foreign currency translation.
+Added: Inventories – net of $864.1 million as of April 2, 2022, increased $60.3 million from 2021 year-end levels primarily to support higher customer demand and new product innovation, partially offset by $0.2 million of foreign currency translation.
+Added: 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 2.8 turns as of both April 2, 2022, and January 1, 2022.
+Added: Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 61% and 60% of total inventories as of April 2, 2022, and January 1, 2022, respectively.
All other inventories are accounted for using the last-in, first-out (“LIFO”) method.
−Removed: The company’s LIFO reserve was $85.9 million and $84.0 million as of October 2, 2021, and January 2, 2021, respectively.
−Removed: As of October 2, 2021, notes payable and current maturities of long-term debt consisted of $17.4 million of other notes.
−Removed: Notes payable and current maturities of long-term debt of $268.5 million as of 2020 year end, consisted of $250.0 million of the 2021 Notes that were repaid in September 2021 upon maturity, $14.9 million of other notes and $3.6 million from the net effects of debt amortization costs and fair value adjustments of interest rate swaps.
−Removed: Accounts payable of $266.9 million as of October 2, 2021, increased $44.0 million from 2020 year-end levels primarily due to the timing of payments and $3.4 million from acquisitions, partially offset by $2.2 million of foreign currency translation.
−Removed: Other accrued liabilities of $446.9 million as of October 2, 2021, increased $1.4 million from 2020 year-end levels primarily due to $6.4 million of higher deferred revenue and $3.4 million from acquisitions, partially offset by $5.1 million of foreign currency translation.
−Removed: Long-term debt of $1,182.7 million as of October 2, 2021, consisted of:
+Added: The company’s LIFO reserve was $88.7 million and $87.2 million as of April 2, 2022, and January 1, 2022, respectively.
+Added: Notes payable of $19.6 million as of April 2, 2022, compared to $17.4 million as of 2021 year end.
+Added: Accounts payable of $297.3 million as of April 2, 2022, increased $19.7 million from 2021 year-end levels primarily due to the timing of payments, partially offset by $0.5 million of foreign currency translation.
+Added: Other accrued liabilities of $484.5 million as of April 2, 2022, increased $60.2 million from 2021 year-end levels primarily due to higher tax accruals, partially offset by $0.7 million of foreign currency translation.
+Added: Long-term debt of $1,183.2 million as of April 2, 2022, consisted of:
(i) $300 million of unsecured 3.25% notes that mature on March 1, 2027 (the “2027 Notes”);
(ii) $400 million of unsecured 4.10% notes that mature on March 1, 2048 (the “2048 Notes”);
−Removed: and (iii) $500 million of 3.10% notes that mature on May 1, 2050 (“the 2050 Notes”), partially offset by $17.3 million from the net effects of debt amortization costs.
+Added: and (iii) $500 million of 3.10% notes that mature on May 1, 2050 (“the 2050 Notes”), partially offset by $16.8 million of unamortized debt issuance costs.
Snap-on has an $800 million multi-currency revolving credit facility that terminates on September 16, 2024 (the “Credit Facility”);
−Removed: no amounts were outstanding under the Credit Facility as of October 2, 2021.
+Added: no amounts were outstanding under the Credit Facility as of April 2, 2022.
Borrowings under the Credit Facility bear interest at varying rates based on either:
4 unchanged sentences
Snap-on may, up to two times during any five-year period during the term of the Credit Facility (including any extensions thereof), elect to increase the maximum Leverage Ratio to 0.65 to 1.00 and/or increase the maximum Consolidated Net Debt to EBITDA Ratio to 4.00 to 1.00 for four consecutive fiscal quarters in connection with certain material acquisitions (as defined in the related credit agreement).
−Removed: As of October 2, 2021, the company’s actual ratios of 0.10 and 0.41 respectively, were both within the permitted ranges set forth in this financial covenant.
+Added: As of April 2, 2022, the company’s actual ratios of 0.08 and 0.30 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.
−Removed: As of October 2, 2021, there were no commercial paper issuances outstanding.
+Added: As of April 2, 2022, there were no commercial paper issuances outstanding.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: 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, however, it is continuing to monitor the impact of the COVID-19 pandemic on its business and the credit and financial markets.
+Added: 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.
Snap-on manages its aggregate short-term borrowings so as not to exceed its availability under the Credit Facility.
1 unchanged sentence
Snap-on regularly monitors the credit and financial markets and, if it believes conditions are favorable, it may take advantage of such conditions to issue long-term debt to further improve its liquidity and capital resources.
−Removed: Near-term liquidity requirements for Snap-on include scheduled debt payments, payments of interest and dividends, funding to support new receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise.
+Added: Near-term liquidity requirements for Snap-on include payments of interest and dividends, funding to support new receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise.
Snap-on intends to make contributions of $9.4 million to its foreign pension plans and $9.5 million to its domestic pension plans in 2022, as required by law.
3 unchanged sentences
Operating Activities
−Removed: Net cash provided by operating activities was $743.9 million and $691.0 million in the first nine months of 2021 and 2020, respectively.
−Removed: The $52.9 million year-over-year increase in net cash provided by operating activities primarily reflects a $179.7 million increase in net earnings, offset by a $141.2 million decrease from net changes in operating assets and liabilities.
+Added: Net cash provided by operating activities was $193.9 million and $319.3 million in the first three months of 2022 and 2021, respectively.
+Added: The $125.4 million year-over-year decrease in net cash provided by operating activities primarily reflects a $141.7 million decrease from net changes in operating assets and liabilities, partially offset by a $25.1 million increase in net earnings.
Investing Activities
−Removed: Net cash used by investing activities of $266.6 million in the first nine months of 2021 included additions to finance receivables of $662.6 million, offset by collections of $648.4 million.
−Removed: Net cash used by investing activities of $114.2 million in the first nine months of 2020 included additions to finance receivables of $611.5 million, partially offset by collections of $542.7 million.
−Removed: 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 and diagnostic and equipment products on an extended-term payment plan, generally with payment terms of approximately four years.
−Removed: Net cash used by investing activities in the respective first nine month periods of 2021 and 2020 also included a net $199.7 million and $6.1 million for acquisitions.
+Added: Net cash used by investing activities of $6.6 million in the first three months of 2022 included additions to finance receivables of $205.5 million, offset by collections of $215.6 million.
+Added: Net cash used by investing activities of $207.2 million in the first three months of 2021 included additions to finance receivables of $216.5 million, offset by collections of $228.6 million.
+Added: 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, generally with payment terms of approximately four years.
+Added: Net cash used by investing activities in the first three months of 2021 also included a net $200.0 million for acquisitions.
See Note 3 to the Condensed Consolidated Financial Statements for information about acquisitions.
−Removed: Capital expenditures were $53.8 million and $39.1 million in the first nine months of 2021 and 2020, respectively.
+Added: Capital expenditures were $20.2 million and $19.3 million in the first three months of 2022 and 2021, respectively.
Capital expenditures in both years included continued investments related to the company’s execution of its strategic Value Creation Processes around safety, quality, customer connection, innovation and RCI.
Financing Activities
−Removed: Net cash used by financing activities of $664.7 million in the first nine months of 2021 included the $250 million repayment of the 2021 Notes at maturity and net proceeds from notes payable and other short-term borrowings of $3.0 million.
−Removed: Net cash provided by financing activities of $27.3 million in the first nine months of 2020 included Snap-on’s sale, on April 30, 2020, of $500 million of the 2050 Notes at a discount, from which Snap-on received $489.9 million of net proceeds, reflecting $4.4 million of transaction costs, partially offset by repayments of notes payable and other short-term borrowings of $187.7 million.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Proceeds from stock purchase and option plan exercises totaled $158.4 million and $16.5 million in the first nine months of 2021 and 2020, respectively.
+Added: Net cash used by financing activities of $106.3 million in the first three months of 2022 included net proceeds from other short-term borrowings of $2.3 million.
+Added: Net cash used by financing activities of $131.0 million in the first three months of 2021 included net proceeds from other short-term borrowings of $2.4 million.
+Added: Proceeds from stock purchase and option plan exercises totaled $5.8 million and $93.0 million in the first three months of 2022 and 2021, respectively.
Snap-on has undertaken stock repurchases from time to time to offset dilution created by shares issued for employee and franchisee stock purchase plans, as well as stock options, and for other corporate purposes.
−Removed: In the first nine months of 2021, Snap-on repurchased 1,588,900 shares of its common stock for $355.8 million under its previously announced share repurchase programs.
−Removed: In the first nine months of 2020, Snap-on repurchased 649,000 shares of its common stock for $95.6 million under its previously announced share repurchase programs.
−Removed: As of October 2, 2021, Snap-on had remaining availability to repurchase up to an additional $197.1 million in common stock pursuant to its Board’s authorizations.
+Added: In the first three months of 2022, Snap-on repurchased 136,000 shares of its common stock for $28.8 million under its previously announced share repurchase programs.
+Added: In the first three months of 2021, Snap-on repurchased 722,000 shares of its common stock for $151.9 million under its previously announced share repurchase programs.
+Added: As of April 2, 2022, Snap-on had remaining availability to repurchase up to an additional $442.2 million in common stock pursuant to its Board’s authorizations.
The purchase of Snap-on common stock is at the company’s discretion, subject to prevailing financial and market conditions.
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.
+Added: SNAP-ON INCORPORATED
+Added: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
+Added: OF OPERATIONS
Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939.
−Removed: Cash dividends totaled $199.7 million and $176.5 million in the first nine months of 2021 and 2020, respectively.
+Added: Cash dividends totaled $75.7 million and $66.7 million in the first three months of 2022 and 2021, respectively.
On November 4, 2021, the Board increased the quarterly cash dividend by 15.4% to $1.42 per share ($5.68 per share annualized).
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.
−Removed: Off-Balance Sheet Arrangements
−Removed: The company had no off-balance sheet arrangements as of October 2, 2021.
Critical Accounting Policies and Estimates
1 unchanged sentence
COVID-19, its subsequent variants, as well as related supply chain inefficiencies, continue to impact economic activity worldwide in 2022.
−Removed: Snap-on is accommodating to the virus-related turbulence and is pursuing opportunities in this mixed environment.
−Removed: The company believes that our markets and our operations have demonstrated and possess considerable resilience against the impact of the virus and that there will be ongoing advancement in the midst of the pandemic.
−Removed: The trajectory of progress, however, may be uncertain due to the evolving nature and duration of the current situation and in 2021, quarterly year-over-year comparisons to 2020 performance may be less meaningful than comparisons to pre-pandemic periods.
−Removed: 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.
−Removed: In pursuit of these initiatives, the company now anticipates that capital expenditures in 2021 will approximate $90 million, of which $53.8 million was incurred in the first nine months of the year.
−Removed: Snap-on continues to respond to the global macroeconomic challenges through its RCI, sourcing and other cost reduction initiatives.
+Added: The company believes that our markets and our operations possess and, indeed, have demonstrated considerable resilience against the impact of the virus and that there will be ongoing advancement even in the midst of the turbulence.
+Added: The trajectory, however, may be uncertain due to the evolving nature of the situation.
+Added: Snap-on expects to make continued progress in 2022 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.
+Added: In pursuit of these initiatives, the company anticipates that capital expenditures in 2022 will be in a range of $90 million to $100 million, of which $20.2 million was incurred in the first three months of the year.
+Added: Snap-on continues to respond to the global macroeconomic challenges through its RCI process and other cost reduction initiatives.
Snap-on currently anticipates that its full year 2022 effective income tax rate will be in the range of 23% to 24%.
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.