4 unchanged sentences
Accordingly, forward-looking statements should not be relied upon as a prediction of actual results or regarded as a representation by the company or its management that the projected results will be achieved.
−Removed: 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.
+Added: 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 December 31, 2022 (“2022 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.
Risks and uncertainties include, without limitation:
−Removed: • 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;
• Uncertainties related to estimates, assumptions and projections generally;
3 unchanged sentences
• The company’s ability to introduce successful new products;
−Removed: • Risks related to pursuing, completing and integrating acquisitions;
−Removed: • Snap-on’s ability to withstand disruption arising from natural disasters, including climate-related events or other unusual occurrences, impacting our operations;
−Removed: • The impact of labor interruptions or challenges;
−Removed: • Snap-on’s ability to successfully manage planned facility closures or to withstand disruptions from unexpected closures;
−Removed: • 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;
−Removed: • 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;
• Significant changes in the current competitive environment;
+Added: • Risks related to pursuing, completing and integrating acquisitions;
• Inflation, interest rate changes and other monetary and market fluctuations;
−Removed: • Changes in tax rates, laws and regulations as well as uncertainty surrounding potential changes;
• Price and supply fluctuations related to raw materials, components and certain purchased finished goods, such as steel, plastics, and electronics;
+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 inefficiencies, including as a result of the current war in Ukraine;
• Snap-on’s ability to successfully manage changes in prices and the availability of energy sources, including gasoline;
+Added: • Snap-on’s ability to withstand disruption arising from natural disasters, including climate-related events or other unusual occurrences;
+Added: • Risks associated with data security and technological systems and protections, including the effects of cyber incidents and from new legislation, regulations or government-related developments;
+Added: • The impact of labor interruptions or challenges, and Snap-on’s ability to effectively manage human capital resources;
+Added: • Snap-on’s ability to successfully manage planned facility closures or to withstand disruptions from unexpected closures;
+Added: • Weakness in certain geographic areas, including as a result of localized recessions, and the impact of matters related to the United Kingdom’s exit from the European Union;
+Added: • Changes in tax rates, laws and regulations as well as uncertainty surrounding potential changes;
+Added: • The amount, rate and growth of health care and postretirement costs, including continuing and potentially increasing required contributions to pension and postretirement plans;
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: • 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;
• The effects of new requirements, legislation, regulations or government-related developments or issues, as well as third party actions, including those addressing climate change;
−Removed: • Risks associated with data security and technological systems and protections, including the effects of new legislation, regulations or government-related developments;
• Potential reputational damages and costs related to litigation;
−Removed: • The ability to effectively manage human capital resources;
−Removed: • Other world or local events outside Snap-on’s control, including terrorist disruptions, other outbreaks of infectious diseases and civil unrest.
+Added: • The impact of the coronavirus (“COVID-19”) pandemic and other outbreaks of infectious diseases, as well as the effects of governmental actions related thereto on Snap-on’s business, which could have the potential to amplify the impact of the other risks facing the company;
+Added: • Other world or local events outside Snap-on’s control, including terrorist disruptions, armed conflicts and civil unrest.
Snap-on disclaims any responsibility to update any forward-looking statement provided in this document, except as required by law.
7 unchanged sentences
Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying growth trends in the company’s businesses and facilitates comparisons of its sales performance with prior periods.
−Removed: Recent Acquisitions
−Removed: On August 1, 2021, Snap-on acquired AutoCrib EMEA GmbH (“AutoCrib Germany”), for a cash purchase price of $4.4 million (or $4.2 million, net of cash acquired).
−Removed: AutoCrib Germany, based in Hamburg, Germany, distributes asset and tool control solutions for a variety of aerospace, automotive, military, natural resources and general industry operations.
−Removed: The acquisition of AutoCrib Germany, a former independent distributor, enhanced and expanded Snap-on’s capabilities in providing solutions for the company’s existing tool control offerings.
−Removed: 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 $20.2 million (or $15.7 million, net of cash acquired), and cash of $1.6 million.
−Removed: Pradines, located in Bauge-en-Anjou, France, designs and manufactures horticultural hand tools for professionals and individuals.
−Removed: Pradines has been the primary supplier of pruning products to Snap-on and the acquisition allows the company to improve and expand its pruning tool offering.
−Removed: On February 26, 2021, Snap-on acquired Dealer-FX Group, Inc.
−Removed: (“Dealer-FX”) for a cash purchase price of $200.1 million (or $200.0 million, net of cash acquired).
−Removed: Dealer-FX, based in Markham, Ontario, is a leading developer, marketer and provider of service operations software solutions for automotive original equipment manufacturer (“OEM”) customers and their dealers.
−Removed: 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 diagnostic programs, and custom analytics to OEMs and dealerships.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: 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.
−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.
−Removed: Effect of COVID-19
−Removed: Our markets and our operations possess and, indeed, have demonstrated considerable resilience against the effects of the pandemic.
−Removed: 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 workforce and manufacturing capacity, as well as its investments in brand building and product development.
−Removed: 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.
−Removed: See also Part I, Item 1A:
−Removed: Risk Factors in Snap-on’s 2021 Form 10-K for an additional discussion of risks related to COVID-19 and Other Infectious Diseases.
RESULTS OF OPERATIONS
−Removed: Results of operations for the three months ended October 1, 2022, and October 2, 2021, are as follows:
+Added: Results of operations for the three months ended April 1, 2023, and April 2, 2022, are as follows:
Three Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
+Added: (Amounts in millions) April 1, 2023 April 2, 2022 Change
Net sales $ 1,183.0 100.0 % $ 1,097.8 100.0 % $ 85.2 7.8 %
8 unchanged sentences
Interest expense (12.4) (1.0) % (11.6) (1.0) % (0.8) (6.9) %
−Removed: Other income (expense) – net 13.1 1.1 % 3.7 0.3 % 9.4 NM
+Added: Other income (expense) – net 15.2 1.2 % 8.3 0.7 % 6.9 83.1 %
Earnings before income taxes 328.9 25.8 % 290.2 24.5 % 38.7 13.3 %
4 unchanged sentences
$ 248.7 19.5 % $ 217.4 18.3 % $ 31.3 14.4 %
−Removed: Not meaningful
Percentage Disclosure:
All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.
−Removed: Net sales of $1,102.5 million in the third quarter of 2022 increased $64.8 million, or 6.2%, from 2021 levels, reflecting a $103.9 million, or 10.4%, organic gain, partially offset by $39.1 million of unfavorable foreign currency translation.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Gross profit of $532.6 million in the third quarter of 2022 increased $11.9 million, or 2.3%, compared to $520.7 million last year.
−Removed: Gross margin (gross profit as a percentage of net sales) of 48.3% in the quarter declined 190 basis points (100 basis points (“bps”) equals 1.0 percent) from the third quarter of 2021 primarily due to higher material and other costs, partially offset by higher sales volumes and pricing actions, benefits from the company’s “Rapid Continuous Improvement” or “RCI” initiatives, and 30 bps of favorable foreign currency effects.
+Added: Net sales of $1,183.0 million in the first quarter of 2023 increased $85.2 million, or 7.8%, from 2022 levels, reflecting a $109.2 million, or 10.2%, organic gain, partially offset by $24.0 million of unfavorable foreign currency translation.
+Added: Gross profit of $589.6 million in the first quarter of 2023 increased $55.3 million, or 10.3%, compared to $534.3 million last year.
+Added: Gross margin (gross profit as a percentage of net sales) of 49.8% in the quarter improved 110 basis points (100 basis points (“bps”) equals 1.0 percent) from the first quarter of 2022 primarily due to increased sales volume s and pricing actions, and benefits from the company’s “Rapid Continuous Improvement” or “RCI” initiatives, partially offset by the effects of higher material and other costs and 20 bps of unfavorable foreign currency.
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.
1 unchanged sentence
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 $309.1 million in the third quarter of 2022 compared to $319.4 million last year.
−Removed: Operating expenses as a percentage of net sales of 28.0% improved 280 bps from last year primarily due to the higher sales volumes and savings from RCI initiatives.
−Removed: Operating earnings before financial services of $223.5 million in the third quarter of 2022 increased $22.2 million, or 11.0%, compared to $201.3 million in the third quarter of 2021.
−Removed: As a percentage of net sales, operating earnings before financial services of 20.3% compared to 19.4% last year.
−Removed: Financial services revenue of $87.3 million in the third quarter of 2022 was unchanged from last year.
−Removed: Financial services operating earnings of $66.4 million in the period compared to $70.6 million in 2021.
−Removed: Operating earnings of $289.9 million in the third quarter of 2022 increased $18.0 million, or 6.6%, compared to $271.9 million last year.
−Removed: As a percentage of revenues (net sales plus financial services revenue), operating earnings of 24.4% in the quarter compared to 24.2% last year.
−Removed: Interest expense in the third quarter of 2022 decreased $1.4 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: Snap-on’s effective income tax rate on earnings attributable to Snap-on was 21.6% in the third quarter of 2022 and 23.7% in the third quarter of 2021.
−Removed: The lower rate in the third quarter of 2022 was primarily due to tax benefits realized from the favorable settlements of income tax audits.
−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 2022 were $223.9 million, or $4.14 per diluted share.
−Removed: Net earnings attributable to Snap-on in the third quarter of 2021 were $196.2 million, or $3.57 per diluted share.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Results of operations for the nine months ended October 1, 2022, and October 2, 2021, are as follows:
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
−Removed: Net sales $ 3,336.9 100.0 % $ 3,143.7 100.0 % $ 193.2 6.1 %
−Removed: Cost of goods sold (1,716.5) (51.4) % (1,566.3) (49.8) % (150.2) (9.6) %
−Removed: Gross profit 1,620.4 48.6 % 1,577.4 50.2 % 43.0 2.7 %
−Removed: Operating expenses (927.2) (27.8) % (958.1) (30.5) % 30.9 3.2 %
−Removed: Operating earnings before financial services 693.2 20.8 % 619.3 19.7 % 73.9 11.9 %
−Removed: Financial services revenue 261.4 100.0 % 262.8 100.0 % (1.4) (0.5) %
−Removed: Financial services expenses (59.3) (22.7) % (58.0) (22.1) % (1.3) (2.2) %
−Removed: Operating earnings from financial services 202.1 77.3 % 204.8 77.9 % (2.7) (1.3) %
−Removed: Operating earnings 895.3 24.9 % 824.1 24.2 % 71.2 8.6 %
−Removed: Interest expense (35.1) (1.0) % (41.8) (1.2) % 6.7 16.0 %
−Removed: Other income (expense) – net 30.7 0.9 % 11.4 0.3 % 19.3 NM
−Removed: Earnings before income taxes and equity earnings 890.9 24.8 % 793.7 23.3 % 97.2 12.2 %
−Removed: Income tax expense (201.5) (5.6) % (182.9) (5.4) % (18.6) (10.2) %
−Removed: Earnings before equity earnings 689.4 19.2 % 610.8 17.9 % 78.6 12.9 %
−Removed: Equity earnings, net of tax — — 1.5 0.1 % (1.5) NM
−Removed: Net earnings 689.4 19.2 % 612.3 18.0 % 77.1 12.6 %
−Removed: Net earnings attributable to noncontrolling interests (16.6) (0.5) % (15.5) (0.5) % (1.1) (7.1) %
−Removed: Net earnings attributable to Snap-on Inc.
−Removed: $ 672.8 18.7 % $ 596.8 17.5 % $ 76.0 12.7 %
−Removed: Not meaningful
−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: Net sales of $3,336.9 million in the first nine months of 2022 increased $193.2 million, or 6.1%, from 2021 levels, reflecting a $271.9 million, or 8.9%, organic gain and $8.5 million of acquisition-related sales, partially offset by $87.2 million of unfavorable foreign currency translation.
−Removed: Gross profit of $1,620.4 million in the first nine months of 2022 increased $43.0 million, or 2.7%, compared to $1,577.4 million last year.
−Removed: Gross margin of 48.6% in the quarter declined 160 bps from last year primarily due to higher material and other costs, partially offset by higher sales volumes and pricing actions, benefits from the company’s RCI initiatives, and 30 bps of favorable foreign currency effects.
−Removed: Operating expenses of $927.2 million in the first nine months of 2022 compared to $958.1 million last year.
−Removed: Operating expenses as a percentage of net sales of 27.8% improved 270 bps from last year primarily due to the higher sales volumes, savings from RCI initiatives, and lower costs associated with stock-based expenses.
−Removed: Operating earnings before financial services of $693.2 million in the first nine months of 2022 increased $73.9 million, or 11.9%, compared to $619.3 million in 2021.
+Added: Operating expenses of $329.8 million in the first quarter of 2023 compared to $311.2 million last year.
+Added: Operating expenses as a percentage of net sales of 27.8% improved 60 bps from last year primarily due to the higher sales volumes.
+Added: Operating earnings before financial services of $259.8 million in the first quarter of 2023 increased $36.7 million, or 16.5%, compared to $223.1 million in the first quarter of 2022.
As a percentage of net sales, operating earnings before financial services of 22.0% compared to 20.3% last year.
−Removed: Financial services revenue of $261.4 million in the first nine months of 2022 compared to $262.8 million last year.
+Added: Financial services revenue of $92.6 million in the first quarter of 2023 compared to $87.7 million last year.
Financial services operating earnings of $66.3 million in the period compared to $70.4 million in 2022.
−Removed: Operating earnings of $895.3 million in the first nine months of 2022 increased $71.2 million, or 8.6%, compared to $824.1 million last year.
−Removed: As a percentage of revenues, operating earnings of 24.9% in the quarter compared to 24.2% last year.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: Interest expense in the first nine months of 2022 decreased $6.7 million compared to last year.
+Added: Operating earnings of $326.1 million in the first quarter of 2023 increased $32.6 million, or 11.1%, compared to $293.5 million last year.
+Added: As a percentage of revenues (net sales plus financial services revenue), operating earnings of 25.6% in the quarter compared to 24.8% last year.
+Added: Interest expense in the first quarter of 2023 increased $0.8 million compared to last year.
See Note 8 to the Condensed Consolidated Financial Statements for information on Snap-on’s debt and credit facilities.
1 unchanged sentence
See Note 16 to the Condensed Consolidated Financial Statements for information on Other income (expense) – net.
−Removed: Snap-on’s effective income tax rate on earnings attributable to Snap-on was 23.0% in the first nine months of 2022 and 23.5% in 2021.
+Added: Snap-on’s effective income tax rate on earnings attributable to Snap-on was 23.1% in the first quarter of 2023 and 23.7% in the first quarter of 2022.
S ee Note 7 to the Condensed Consolidated Financial Statements for information on income taxes.
−Removed: Net earnings attributable to Snap-on in the first nine months of 2022 were $672.8 million, or $12.41 per diluted share.
−Removed: Net earnings attributable to Snap-on in the first nine months of 2021 were $596.8 million, or $10.83 per diluted share.
+Added: Net earnings attributable to Snap-on in the first quarter of 2023 of $248.7 million, or $4.60 per diluted share, increased $31.3 million, or $0.60 per diluted share, as compared to $217.4 million, or $4.00 per diluted share, in the first quarter of 2022.
Segment Results
5 unchanged sentences
and (iv) Financial Services.
−Removed: The Commercial & Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide, including customers in the aerospace, natural resources, government, power generation, transportation and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels.
−Removed: 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.
+Added: The Commercial & Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide, including customers in the aerospace, natural resources, government and military, power generation, transportation and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels.
+Added: The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s multi-national mobile tool distribution channel.
The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM dealerships, through direct and distributor channels.
7 unchanged sentences
Three Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
+Added: (Amounts in millions) April 1, 2023 April 2, 2022 Change
External net sales $ 278.6 76.6 % $ 261.2 76.8 % $ 17.4 6.7 %
5 unchanged sentences
Segment operating earnings $ 55.8 15.3 % $ 45.7 13.4 % $ 10.1 22.1 %
−Removed: Segment net sales of $356.8 million in the third quarter of 2022 increased $5.4 million, or 1.5%, from 2021 levels, reflecting a $26.2 million, or 7.9%, organic sales increase, partially offset by $20.8 million of unfavorable foreign currency translation.
−Removed: The organic increase primarily reflects double-digit gains in the segment’s Asia Pacific operations and specialty tools business, as well as a low single-digit increase in sales to customers in critical industries, despite lower activity with the military.
−Removed: Segment gross margin in the third quarter of 36.9% declined 130 bps from last year, primarily due to increased material and other costs, partially offset by benefits from the higher sales volumes and pricing actions, and 20 bps of favorable foreign currency effects.
+Added: Segment net sales of $363.8 million in the first quarter of 2023 increased $23.7 million, or 7.0%, from 2022 levels, reflecting a $36.2 million, or 11.1%, organic sales increase, partially offset by $12.5 million of unfavorable foreign currency translation.
+Added: The organic increase primarily reflects double-digit gains in sales to customers in critical industries and in the segment’s specialty tools business, as well as a low single-digit increase in the segment’s European-based hand tools business.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: Segment operating expenses as a percentage of sales in the third quarter of 22.2% improved 70 bps as compared to 2021 primarily due to the effects of higher sales volumes.
−Removed: As a result of these factors, segment operating earnings of $52.3 million in the third quarter of 2022, including $2.1 million of unfavorable foreign currency effects, decreased $1.3 million, or 2.4%, compared to $53.6 million in 2021.
−Removed: Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 14.7% in the third quarter of 2022 compared to 15.3% in 2021.
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
−Removed: External net sales $ 800.1 75.8 % $ 817.5 78.0 % $ (17.4) (2.1) %
−Removed: Intersegment net sales 255.9 24.2 % 230.1 22.0 % 25.8 11.2 %
−Removed: Segment net sales 1,056.0 100.0 % 1,047.6 100.0 % 8.4 0.8 %
−Removed: Cost of goods sold (666.7) (63.1) % (641.1) (61.2) % (25.6) (4.0) %
−Removed: Gross profit 389.3 36.9 % 406.5 38.8 % (17.2) (4.2) %
−Removed: Operating expenses (239.6) (22.7) % (246.7) (23.5) % 7.1 2.9 %
−Removed: Segment operating earnings $ 149.7 14.2 % $ 159.8 15.3 % $ (10.1) (6.3) %
−Removed: Segment net sales of $1,056.0 million in the first nine months of 2022 increased $8.4 million, or 0.8%, from 2021 levels, reflecting a $55.1 million, or 5.5%, organic sales increase, partially offset by $46.7 million of unfavorable foreign currency translation.
−Removed: The organic gain primarily reflects a double-digit increase in the segment’s Asia Pacific operations, a mid single-digit gain in the segment’s European-based hand tools business, and a low single-digit increase in sales to customers in critical industries, despite lower activity with the military.
−Removed: Segment gross margin in the first nine months of 36.9% declined 190 bps from last year, primarily due to increased material and other costs, partially offset by benefits from the higher sales volumes and pricing actions, as well as from the segment’s RCI initiatives.
−Removed: Segment operating expenses as a percentage of sales in the first nine months of 22.7% improved 80 bps as compared to 2021 primarily due to the effects of higher sales volumes.
−Removed: As a result of these factors, segment operating earnings of $149.7 million in the first nine months of 2022, including $6.3 million of unfavorable foreign currency effects, decreased $10.1 million, or 6.3%, compared to $159.8 million in 2021.
−Removed: Operating margin for the Commercial & Industrial Group of 14.2% in the first nine months of 2022 compared to 15.3% in 2021.
+Added: Segment gross margin in the first quarter of 38.8% improved 240 bps from last year, primarily due to higher sales volumes, including increased activity in higher gross margin critical industries, pricing actions, and benefits from the segment’s RCI initiatives.
+Added: These improvements were partially offset by the effects of higher material and other costs.
+Added: Segment operating expenses as a percentage of sales in the first quarter of 23.5% increased 50 bps as compared to 2022 primarily due to increased sales in higher-expense businesses.
+Added: As a result of these factors, segment operating earnings of $55.8 million in the first quarter of 2023, including $2.0 million of unfavorable foreign currency effects, increased $10.1 million, or 22.1%, compared to $45.7 million in 2022.
+Added: Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.3% in the first quarter of 2023 compared to 13.4% in 2022.
Snap-on Tools Group
Three Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
+Added: (Amounts in millions) April 1, 2023 April 2, 2022 Change
Segment net sales $ 537.0 100.0 % $ 512.1 100.0 % $ 24.9 4.9 %
3 unchanged sentences
Segment operating earnings $ 131.7 24.5 % $ 116.0 22.7 % $ 15.7 13.5 %
−Removed: Segment net sales of $496.6 million in the third quarter of 2022 increased $25.2 million, or 5.3%, from 2021 levels, reflecting a $34.1 million, or 7.4%, organic sales gain, partially offset by $8.9 million of unfavorable foreign currency translation.
+Added: Segment net sales of $537.0 million in the first quarter of 2023 increased $24.9 million, or 4.9%, from 2022 levels, reflecting a $32.0 million, or 6.3%, organic sales gain, partially offset by $7.1 million of unfavorable foreign currency translation.
The organic increase is due to a high single-digit gain in the U.S.
−Removed: franchise business, partially offset by a low single-digit decrease in the segment’s international operations.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Segment gross margin in the third quarter of 44.9% declined 90 bps from last year primarily due to increased material and other costs, and 40 bps of unfavorable foreign currency effects, which were partially offset by benefits from the higher sales volumes and pricing actions.
−Removed: Segment operating expenses as a percentage of net sales in the third quarter of 24.3% improved 70 bps from last year primarily due to the effects of higher sales volumes and benefits from the segment’s RCI initiatives.
−Removed: As a result of these factors, segment operating earnings of $102.2 million in the third quarter of 2022, including $4.2 million of unfavorable foreign currency effects, increased $4.0 million, or 4.1%, compared to $98.2 million in 2021.
−Removed: Operating margin for the Snap-on Tools Group of 20.6% in the third quarter of 2022 compared to 20.8% last year.
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
−Removed: Segment net sales $ 1,529.3 100.0 % $ 1,433.8 100.0 % $ 95.5 6.7 %
−Removed: Cost of goods sold (833.4) (54.5) % (771.7) (53.8) % (61.7) (8.0) %
−Removed: Gross profit 695.9 45.5 % 662.1 46.2 % 33.8 5.1 %
−Removed: Operating expenses (353.3) (23.1) % (361.5) (25.2) % 8.2 2.3 %
−Removed: Segment operating earnings $ 342.6 22.4 % $ 300.6 21.0 % $ 42.0 14.0 %
−Removed: Segment net sales of $1,529.3 million in the first nine months of 2022 increased $95.5 million, or 6.7%, from 2021 levels, reflecting a $115.1 million, or 8.1%, organic sales gain, partially offset by $19.6 million of unfavorable foreign currency translation.
−Removed: The organic increase includes a double-digit gain in the U.S.
−Removed: franchise business, partially offset by a low single-digit decrease in the segment’s international operations.
−Removed: Segment gross margin in the first nine months of 45.5% declined 70 bps from last year primarily due to increased material and other costs, which were partially offset by benefits from the higher sales volumes and pricing actions.
−Removed: Segment operating expenses as a percentage of net sales in the first nine months of 23.1% improved 210 bps from last year and includes the effects of lower expenses related to the company’s franchisee stock purchase plan, benefits from higher sales volumes, and savings associated with RCI initiatives.
−Removed: As a result of these factors, segment operating earnings of $342.6 million in the first nine months of 2022, including $5.6 million of unfavorable foreign currency effects, increased $42.0 million, or 14.0%, compared to $300.6 million in 2021.
−Removed: Operating margin for the Snap-on Tools Group of 22.4% in the first nine months of 2022 compared to 21.0% last year.
+Added: franchise business and a low single-digit increase in the segment’s international operations.
+Added: Segment gross margin in the first quarter of 47.3% improved 180 bps from last year primarily due to increased sales volumes and pricing actions, lower material and other costs, and benefits from the segment’s RCI initiatives .
+Added: These improvements were partially offset by 80 bps of unfavorable foreign currency effects.
+Added: Segment operating expenses as a percentage of net sales in the first quarter of 22.8% was unchanged from last year.
+Added: As a result of these factors, segment operating earnings of $131.7 million in the first quarter of 2023, including $6.1 million of unfavorable foreign currency effects, increased $15.7 million, or 13.5%, compared to $116.0 million in 2022.
+Added: Operating margin for the Snap-on Tools Group of 24.5% in the first quarter of 2023 compared to 22.7% last year.
Repair Systems & Information Group
Three Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
+Added: (Amounts in millions) April 1, 2023 April 2, 2022 Change
External net sales $ 367.4 82.3 % $ 324.5 81.5 % $ 42.9 13.2 %
5 unchanged sentences
Segment operating earnings $ 104.6 23.4 % $ 91.6 23.0 % $ 13.0 14.2 %
−Removed: Segment net sales of $414.0 million in the third quarter of 2022 increased $49.6 million, or 13.6%, from 2021 levels, reflecting a $60.8 million, or 17.2%, organic sales increase, partially offset by $11.2 million of unfavorable foreign currency translation.
−Removed: The organic gain includes double-digit increases in activity with OEM dealerships and in sales of undercar equipment, and a low single-digit gain in sales of diagnostic and repair information products to independent repair shop owners and managers.
+Added: Segment net sales of $446.6 million in the first quarter of 2023 increased $48.4 million, or 12.2%, from 2022 levels, reflecting a $54.4 million, or 13.9%, organic sales increase, partially offset by $6.0 million of unfavorable foreign currency translation.
+Added: The organic gain includes double-digit increases in sales of undercar equipment and in activity with OEM dealerships, and a mid single-digit gain in sales of diagnostic and repair information products to independent repair shop owners and managers.
SNAP-ON INCORPORATED
1 unchanged sentence
OF OPERATIONS
−Removed: Segment gross margin in the third quarter of 42.9% declined 390 bps from last year primarily due to higher material and other costs, and increased sales in lower gross margin businesses.
−Removed: These declines were partially offset by benefits from pricing actions and savings from RCI initiatives, as well as 40 bps of favorable foreign currency effects.
−Removed: Segment operating expenses as a percentage of net sales in the third quarter of 19.9% improved 400 bps from 2021 primarily due to benefits from sales volume leverage, higher activity in lower expense businesses, and savings from RCI initiatives.
−Removed: As a result of these factors, segment operating earnings of $95.4 million in the third quarter of 2022, including $0.6 million of favorable foreign currency effects, increased $12.1 million, or 14.5%, from $83.3 million in 2021.
−Removed: Operating margin for the Repair Systems & Information Group of 23.0% in the third quarter of 2022 compared to 22.9% last year.
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
−Removed: External net sales $ 1,007.5 82.0 % $ 892.4 80.4 % $ 115.1 12.9 %
−Removed: Intersegment net sales 221.5 18.0 % 218.2 19.6 % 3.3 1.5 %
−Removed: Segment net sales 1,229.0 100.0 % 1,110.6 100.0 % 118.4 10.7 %
−Removed: Cost of goods sold (693.8) (56.5) % (601.8) (54.2) % (92.0) (15.3) %
−Removed: Gross profit 535.2 43.5 % 508.8 45.8 % 26.4 5.2 %
−Removed: Operating expenses (252.5) (20.5) % (257.4) (23.2) % 4.9 1.9 %
−Removed: Segment operating earnings $ 282.7 23.0 % $ 251.4 22.6 % $ 31.3 12.5 %
−Removed: Segment net sales of $1,229.0 million in the first nine months of 2022 increased $118.4 million, or 10.7%, from 2021 levels, reflecting a $133.9 million, or 12.3%, organic sales increase and $8.5 million of acquisition-related sales, partially offset by $24.0 million of unfavorable foreign currency translation.
−Removed: The organic gain is comprised of double-digit increases in sales of undercar equipment and in activity with OEM dealerships, and a low single-digit increase in sales of diagnostic and repair information products to independent repair shop owners and managers.
−Removed: Segment gross margin in the first nine months of 43.5% declined 230 bps from last year primarily due to higher material and other costs, and increased sales in lower gross margin businesses.
+Added: Segment gross margin in the first quarter of 43.5% declined 110 bps from last year primarily due to increased sales in lower gross margin businesses and the effects of higher material and other costs.
These declines were partially offset by benefits from pricing actions and savings from RCI initiatives, as well as 30 bps of favorable foreign currency effects.
−Removed: Segment operating expenses as a percentage of net sales in the first nine months of 20.5%, improved 270 bps from 2021 primarily due to benefits from sales volume leverage, higher activity in lower expense businesses, and savings from RCI initiatives.
−Removed: As a result of these factors, segment operating earnings of $282.7 million in the first nine months of 2022, including $2.7 million of favorable foreign currency effects, increased $31.3 million, or 12.5%, from $251.4 million in 2021.
−Removed: Operating margin for the Repair Systems & Information Group of 23.0% in the first nine months of 2022 compared to 22.6% last year.
+Added: Segment operating expenses as a percentage of net sales in the first quarter of 20.1% improved 150 bps from 2022 primarily due to benefits from sales volume leverage, higher activity in lower-expense businesses, and savings from RCI initiatives.
+Added: As a result of these factors, segment operating earnings of $104.6 million in the first quarter of 2023, including $0.5 million of favorable foreign currency effects, increased $13.0 million, or 14.2%, from $91.6 million in 2022.
+Added: Operating margin for the Repair Systems & Information Group of 23.4% in the first quarter of 2023 compared to 23.0% last year.
Financial Services
Three Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
+Added: (Amounts in millions) April 1, 2023 April 2, 2022 Change
Financial services revenue $ 92.6 100.0 % $ 87.7 100.0 % $ 4.9 5.6 %
2 unchanged sentences
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.
−Removed: Financial services revenue in the third quarter of 2022 was unchanged from 2021.
−Removed: In the third quarters of 2022 and 2021, the respective average yields on finance receivables were 17.7% and 17.8%.
−Removed: In the third quarters of 2022 and 2021, the average yields on contract receivables were 8.6% and 8.5%, respectively.
−Removed: Originations of $300.2 million in the third quarter of 2022 increased $30.9 million, or 11.5%, from 2021 levels.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
+Added: Financial services revenue in the first quarter of 2023 increased $4.9 million, or 5.6%, from $87.7 million last year.
+Added: In the first quarters of 2023 and 2022, the respective average yields on finance receivables were 17.7% and 17.6%.
+Added: In the first quarters of 2023 and 2022, the average yields on contract receivables were 8.7% and 8.5%, respectively.
+Added: Originations of $300.9 million in the first quarter of 2023 increased $55.3 million, or 22.5%, from 2022 levels.
Financial services expenses primarily include personnel-related and other general and administrative costs, as well as provisions for credit losses.
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 2022 increased primarily due to higher provisions for credit losses as compared to those recorded in the third quarter of 2021.
−Removed: As a percentage of the average financial services portfolio, expenses were 0.9% in the third quarter of 2022 and 0.8% in 2021.
−Removed: Segment operating earnings in the third quarter of 2022, including $0.8 million of unfavorable foreign currency effects, decreased $4.2 million, or 5.9%, from 2021 levels.
−Removed: Nine Months Ended
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 Change
−Removed: Financial services revenue $ 261.4 100.0 % $ 262.8 100.0 % $ (1.4) (0.5) %
−Removed: Financial services expenses (59.3) (22.7) % (58.0) (22.1) % (1.3) (2.2) %
−Removed: Segment operating earnings $ 202.1 77.3 % $ 204.8 77.9 % $ (2.7) (1.3) %
−Removed: Financial services revenue in the first nine months of 2022 decreased $1.4 million, or 0.5%, from 2021.
−Removed: In both the first nine months of 2022 and 2021, the average yields on finance receivables and contract receivables were 17.6% and 8.5%, respectively.
−Removed: Originations of $853.4 million in the first nine months of 2022 increased $36.5 million, or 4.5%, from 2021 levels.
−Removed: Financial services expenses in the first nine months of 2022 increased primarily due to higher provisions for credit losses as compared to those recorded in the first nine months of 2021.
−Removed: As a percentage of the average financial services portfolio, expenses were 2.7% in the first nine months of 2022 and 2.6% in 2021.
−Removed: Segment operating earnings in the first nine months of 2022, including $1.6 million of unfavorable foreign currency effects, decreased $2.7 million, or 1.3%, from 2021 levels.
−Removed: Snap-on’s third quarter 2022 general corporate expenses of $26.4 million decreased $7.4 million from $33.8 million last year primarily due to lower brand-building expenses associated with last year’s 100th anniversary and lower performance-based compensation.
−Removed: Snap-on’s general corporate expenses of $81.8 million in the first nine months of 2022 decreased $10.7 million from $92.5 million last year.
−Removed: The year-over-year decrease primarily reflects lower costs associated with the company’s employee stock purchase plan and decreased 100th anniversary expenses, partially offset by other cost increases.
+Added: Financial services expenses in the first quarter of 2023 increased primarily due to higher provisions for credit losses as compared to those recorded in the first quarter of 2022.
+Added: As a percentage of the average financial services portfolio, expenses were 1.1% in the first quarter of 2023 and 0.8% in 2022.
+Added: Segment operating earnings in the first quarter of 2023, including $0.7 million of unfavorable foreign currency effects, decreased $4.1 million, or 5.8%, from 2022 levels.
+Added: Snap-on’s first quarter 2023 general corporate expenses of $32.3 million increased $2.1 million from $30.2 million last year primarily due to higher stock-based and performance-based compensation.
Non-GAAP Supplemental Data
7 unchanged sentences
and international financial services businesses.
−Removed: Transactions between the Operations and Financial Services businesses are eliminated to arrive at the Condensed Consolidated Financial Statements.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
−Removed: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the three months ended October 1, 2022, and October 2, 2021, are as follows:
−Removed: Operations* Financial Services
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021
−Removed: Net sales $ 1,102.5 $ 1,037.7 $ — $ —
−Removed: Cost of goods sold (569.9) (517.0) — —
−Removed: Gross profit 532.6 520.7 — —
−Removed: Operating expenses (309.1) (319.4) — —
−Removed: Operating earnings before financial services 223.5 201.3 — —
−Removed: Financial services revenue — — 87.3 87.3
−Removed: Financial services expenses — — (20.9) (16.7)
−Removed: Operating earnings from financial services — — 66.4 70.6
−Removed: Operating earnings 223.5 201.3 66.4 70.6
−Removed: Interest expense (11.7) (13.2) (0.1) —
−Removed: Intersegment interest income (expense) – net 14.7 13.6 (14.7) (13.6)
−Removed: Other income (expense) – net 13.0 3.7 0.1 —
−Removed: Earnings before income taxes and equity earnings 239.5 205.4 51.7 57.0
−Removed: Income tax expense (48.4) (47.1) (13.3) (13.8)
−Removed: Earnings before equity earnings 191.1 158.3 38.4 43.2
−Removed: Financial services – net earnings attributable to Snap-on 38.4 43.2 — —
−Removed: Net earnings 229.5 201.5 38.4 43.2
−Removed: Net earnings attributable to noncontrolling interests (5.6) (5.3) — —
−Removed: Net earnings attributable to Snap-on $ 223.9 $ 196.2 $ 38.4 $ 43.2
−Removed: * Snap-on with Financial Services presented on the equity method.
+Added: Transactions between the Operations and Financial Services businesses were eliminated to arrive at the Condensed Consolidated Financial Statements.
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 1, 2022, and October 2, 2021, are as follows:
+Added: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the three months ended April 1, 2023, and April 2, 2022, are as follows:
Operations* Financial Services
−Removed: (Amounts in millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021
+Added: (Amounts in millions) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022
Net sales $ 1,183.0 $ 1,097.8 $ — $ —
14 unchanged sentences
Financial services – net earnings attributable to Snap-on 37.5 41.2 — —
−Removed: Equity earnings, net of tax — 1.5 — —
Net earnings 254.3 222.7 37.5 41.2
5 unchanged sentences
OF OPERATIONS
−Removed: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Balance Sheet information as of October 1, 2022, and January 1, 2022, is as follows:
+Added: Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Balance Sheet information as of April 1, 2023, and December 31, 2022, is as follows:
Operations* Financial Services
−Removed: (Amounts in millions) October 1, 2022 January 1, 2022 October 1, 2022 January 1, 2022
+Added: (Amounts in millions) April 1,
+Added: 2023 December 31, 2022 April 1,
+Added: 2023 December 31, 2022
Current assets:
16 unchanged sentences
Other intangibles – net 273.3 275.6 — —
+Added: Pension assets 71.8 70.6 — —
Other assets 27.0 27.1 0.1 0.1
6 unchanged sentences
Operations* Financial Services
−Removed: (Amounts in millions) October 1, 2022 January 1, 2022 October 1, 2022 January 1, 2022
+Added: (Amounts in millions) April 1,
+Added: 2023 December 31, 2022 April 1,
+Added: 2023 December 31, 2022
LIABILITIES AND EQUITY
28 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 14, 2022, 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 14, 2023, Snap-on’s long-term debt and commercial paper were rated, respectively, A2 and P-1 by Moody’s Investors Service;
A- and A-2 by Standard & Poor’s;
3 unchanged sentences
The following discussion focuses on information included in the accompanying Condensed Consolidated Balance Sheets.
−Removed: As of October 1, 2022, working capital (current assets less current liabilities) of $2,276.1 million increased $204.9 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.
−Removed: The following represents the company’s working capital position as of October 1, 2022, and January 1, 2022:
−Removed: (Amounts in millions) October 1, 2022 January 1, 2022
+Added: As of April 1, 2023, working capital (current assets less current liabilities) of $2,482.2 million increased $84.9 million from $2,397.3 million as of December 31, 2022 (fiscal 2022 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 1, 2023, and December 31, 2022:
+Added: (Amounts in millions) April 1,
+Added: 2023 December 31, 2022
Cash and cash equivalents $ 833.8 $ 757.2
10 unchanged sentences
Working capital $ 2,482.2 $ 2,397.3
−Removed: Cash and cash equivalents of $759.3 million as of October 1, 2022, decreased $20.7 million from 2021 year-end levels primarily due to:
−Removed: (i) the funding of $703.7 million of new finance receivables;
−Removed: (ii) dividend payments to shareholders of $227.1 million;
−Removed: (iii) the repurchase of 615,000 shares of the company’s common stock for $132.8 million;
−Removed: and (iv) the funding of $61.5 million of capital expenditures.
−Removed: These decreases in cash and cash equivalents were partially offset by:
−Removed: (i) $622.1 million of cash from collections of finance receivables;
−Removed: (ii) $464.6 million of cash generated from operations;
+Added: Cash and cash equivalents of $833.8 million as of April 1, 2023, increased $76.6 million from 2022 year-end levels primarily due to:
+Added: (i) $301.6 million of cash generated from operations;
+Added: (ii) $207.5 million of cash from collections of finance receivables;
(iii) $32.8 million of cash proceeds from stock purchase and option plan exercises;
and (iv) $0.8 million of net proceeds from other short-term borrowings.
−Removed: Of the $759.3 million of cash and cash equivalents as of October 1, 2022, $217.1 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 $257.1 million of new finance receivables;
+Added: (ii) the repurchase of 356,000 shares of the company’s common stock for $87.2 million;
+Added: (iii) dividend payments to shareholders of $86.1 million;
+Added: and (iv) the funding of $23.0 million of capital expenditures.
+Added: Of the $833.8 million of cash and cash equivalents as of April 1, 2023, $267.9 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 $739.0 million as of October 1, 2022, increased $56.7 million from 2021 year-end levels primarily due to higher sales, partially offset by $35.6 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 60 days at October 1, 2022, and 58 days at January 1, 2022.
−Removed: The current portions of net finance and contract receivables of $670.8 million as of October 1, 2022, compared to $652.7 million at 2021 year end.
−Removed: The long-term portions of net finance and contract receivables of $1,505.3 million as of October 1, 2022, compared to $1,492.2 million at 2021 year end.
−Removed: The combined $31.2 million increase in net current and long-term finance and contract receivables over 2021 year-end levels is primarily due to an increase in net receivable originations, offset by $36.0 million of foreign currency translation.
−Removed: Inventories – net of $955.1 million as of October 1, 2022, increased $151.3 million from 2021 year-end levels primarily to support higher customer demand and new product innovation, partially offset by $56.0 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 2.6 turns and 2.8 turns as of October 1, 2022, and January 1, 2022, respectively.
−Removed: Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 59% and 60% of total inventories as of October 1, 2022, and January 1, 2022, respectively.
+Added: Trade and other accounts receivable – net of $782.4 million as of April 1, 2023, increased $20.7 million from 2022 year-end levels primarily due to higher sales and $3.7 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 62 days at April 1, 2023, and 61 days at December 31, 2022.
+Added: The current portions of net finance and contract receivables of $677.9 million as of April 1, 2023, compared to $672.1 million at 2022 year end.
+Added: The long-term portions of net finance and contract receivables of $1,584.9 million as of April 1, 2023, compared to $1,554.6 million at 2022 year end.
+Added: The combined $36.1 million increase in net current and long-term finance and contract receivables over 2022 year-end levels is primarily due to an increase in net receivable originations and $1.1 million of foreign currency translation.
+Added: Inventories – net of $1,049.1 million as of April 1, 2023, increased $16.0 million from 2022 year-end levels primarily due to higher demand, increased costs, efforts to manage the current supply chain situation and $6.2 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 2.4 turns and 2.5 turns as of April 1, 2023, and December 31, 2022, respectively.
+Added: Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 61% of total inventories as of both April 1, 2023, and December 31, 2022.
All other inventories are accounted for using the last-in, first-out (“LIFO”) method.
−Removed: The company’s LIFO reserve was $92.3 million and $87.2 million as of October 1, 2022, and January 1, 2022, respectively.
−Removed: Notes payable of $17.7 million as of October 1, 2022, compared to $17.4 million as of 2021 year end.
−Removed: Accounts payable of $305.3 million as of October 1, 2022, increased $27.7 million from 2021 year-end levels primarily due to the timing of payments, partially offset by $14.3 million of foreign currency translation.
−Removed: Other accrued liabilities of $440.7 million as of October 1, 2022, increased $16.4 million from 2021 year-end levels primarily due to higher tax accruals, offset by $22.0 million of foreign currency translation.
−Removed: Long-term debt of $1,183.6 million as of October 1, 2022, consisted of:
+Added: The company’s LIFO reserve was $108.9 million and $108.6 million as of April 1, 2023, and December 31, 2022, respectively.
+Added: Notes payable of $18.2 million as of April 1, 2023, compared to $17.2 million as of 2022 year end.
+Added: Accounts payable of $283.1 million as of April 1, 2023, decreased $3.9 million from 2022 year-end levels primarily due to the timing of payments, partially offset by $1.0 million of foreign currency translation.
+Added: Other accrued liabilities of $491.3 million as of April 1, 2023, increased $54.9 million from 2022 year-end levels primarily due to higher tax accruals and $1.6 million of foreign currency translation.
+Added: Long-term debt of $1,184.0 million as of April 1, 2023, consisted of:
(i) $300 million of unsecured 3.25% notes that mature on March 1, 2027 (the “2027 Notes”);
2 unchanged sentences
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 1, 2022.
−Removed: On September 15, 2022, the Credit Facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with other benchmark interest rates.
+Added: no amounts were borrowed or outstanding under the Credit Facility for the three months ended and as of April 1, 2023.
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 1, 2022, the company’s actual ratios of 0.09 and 0.37 respectively, were both within the permitted ranges set forth in this financial covenant.
+Added: As of April 1, 2023, 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 1, 2022, there were no commercial paper issuances outstanding.
+Added: As of April 1, 2023, there were no commercial paper issuances outstanding.
SNAP-ON INCORPORATED
11 unchanged sentences
Operating Activities
−Removed: Net cash provided by operating activities was $464.6 million and $743.9 million in the first nine months of 2022 and 2021, respectively.
−Removed: The $279.3 million year-over-year decrease in net cash provided by operating activities primarily reflects a $327.1 million decrease from net changes in operating assets and liabilities, partially offset by a $77.1 million increase in net earnings.
+Added: Net cash provided by operating activities was $301.6 million and $193.9 million in the first three months of 2023 and 2022, respectively.
+Added: The $107.7 million year-over-year increase in net cash provided by operating activities primarily reflects a $66.6 million change in net operating assets and liabilities and a $31.6 million increase in net earnings.
Investing Activities
−Removed: Net cash used by investing activities of $138.3 million in the first nine months of 2022 included additions to finance receivables of $703.7 million, offset by collections of $622.1 million.
−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.
+Added: Net cash used by investing activities of $72.9 million in the first three months of 2023 included additions to finance receivables of $257.1 million, offset by collections of $207.5 million.
+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.
Finance receivables are comprised of extended-term installment payment contracts to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics, and equipment products on an extended-term payment plan, with average payment terms of approximately four years.
−Removed: Net cash used by investing activities in the respective first nine months of 2022 and 2021 also included $0.5 million of cash provided by and $199.7 million of cash used for acquisitions.
−Removed: See Note 3 to the Condensed Consolidated Financial Statements for information about acquisitions.
−Removed: Capital expenditures were $61.5 million and $53.8 million in the first nine months of 2022 and 2021, respectively.
+Added: Capital expenditures were $23.0 million and $20.2 million in the first three months of 2023 and 2022, 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 $339.2 million in the first nine months of 2022 included net proceeds from other short-term borrowings of $2.6 million.
−Removed: Net cash used by financing activities of $664.7 million in the first nine months of 2021 included the September 2021 repayment of $250 million of long-term notes at maturity (“the 2021 Notes”) and net proceeds from other short-term borrowings of $3.0 million.
−Removed: Proceeds from stock purchase and option plan exercises totaled $41.4 million and $158.4 million in the first nine months of 2022 and 2021, respectively.
−Removed: In the first nine months of 2022, Snap-on repurchased 615,000 shares of its common stock for $132.8 million under its previously announced share repurchase programs.
−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: As of October 1, 2022, Snap-on had remaining availability to repurchase up to an additional $396.0 million in common stock pursuant to its Board’s authorizations.
+Added: Net cash used by financing activities of $152.1 million in the first three months of 2023 included net proceeds from other short-term borrowings of $0.8 million;
+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: Proceeds from stock purchase and option plan exercises totaled $32.8 million and $5.8 million in the first three months of 2023 and 2022, respectively.
+Added: In the first three months of 2023, Snap-on repurchased 356,000 shares of its common stock for $87.2 million under its previously announced share repurchase programs.
+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: As of April 1, 2023, Snap-on had remaining availability to repurchase up to an additional $345.4 million in common stock pursuant to its Board’s authorizations.
The repurchase of Snap-on common stock to offset dilution related to equity plan issuances or for other corporate purposes 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.
−Removed: SNAP-ON INCORPORATED
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
−Removed: OF OPERATIONS
Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939.
−Removed: Cash dividends totaled $227.1 million and $199.7 million in the first nine months of 2022 and 2021, respectively.
+Added: Cash dividends totaled $86.1 million and $75.7 million in the first three months of 2023 and 2022, respectively.
On November 4, 2022, the Board increased the quarterly cash dividend by 14.1% to $1.62 per share ($6.48 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.
+Added: SNAP-ON INCORPORATED
+Added: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
+Added: OF OPERATIONS
Critical Accounting Policies and Estimates
−Removed: Snap-on’s discussion of its critical accounting policies and estimates, contained in its Annual Report on Form 10-K for the fiscal year ended January 1, 2022, have not materially changed since the report was filed.
−Removed: COVID-19 and its subsequent variants, as well as supply chain inefficiencies, continue to impact economic activity worldwide in 2022.
−Removed: 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.
−Removed: The trajectory, however, may be uncertain due to the evolving nature of the situation.
−Removed: 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.
−Removed: 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 $61.5 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 process and other cost reduction initiatives.
+Added: Snap-on’s discussion of its critical accounting policies and estimates, contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, have not materially changed since the report was filed.
+Added: We believe that our markets and our operations possess and have demonstrated continuing and considerable resilience against the uncertainties of the current environment.
+Added: In 2023, Snap-on expects to make ongoing progress along its defined runways for coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high.
+Added: In pursuit of these initiatives, it is projected that capital expenditures in 2023 will approximate $100 million, of which $23.0 million was incurred in the first three months of the year.
Snap-on currently anticipates that its full year 2023 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.