What changed in this filing

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Item 1. Business

2024-02-16 compared with 2023-02-09 · 40 added, 37 removed, 269 unchanged (22% of the section changed)

17 unchanged sentences

Snap-on’s primary customer segments include:

(i) commercial and industrial customers, including professionals in critical industries and emerging markets;

(ii) professional vehicle repair technicians who purchase products through the company’s mobile tool distribution network;

and (iii) other professional customers related to vehicle repair, including owners and managers of independent and original equipment manufacturer (“OEM”) dealership service and repair shops (“OEM dealerships”).

(i) commercial and industrial customers, including professionals in critical industries and in emerging markets;

(ii) professional vehicle repair technicians who purchase products through the company’s multinational mobile tool distribution network;

and (iii) other professional customers related to vehicle repair, including owners and managers of independent service and repair shops, as well as original equipment manufacturer (“OEM”) dealership service and repair shops (“OEM dealerships”).

Snap-on’s Financial Services customer segment includes:

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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.

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 Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s multinational mobile tool distribution channel.

The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM dealerships, through direct and distributor channels.

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See Note 19 to the Consolidated Financial Statements for information on business segments and foreign operations.

Snap-on evaluates the performance of its operating segments based on segment revenues, including both external and intersegment net sales, and segment operating earnings.

Snap-on accounts for intersegment sales and transfers based primarily on standard costs with reasonable mark-ups established between the segments.

Snap-on evaluates the performance of its operating segments based on segment revenues and segment operating earnings.

The Snap-on Tools Group segment revenues include external net sales, while the Commercial & Industrial Group and the Repair Systems & Information Group segment revenues include both external and intersegment net sales.

Snap-on accounts for intersegment net sales and transfers based primarily on standard costs with reasonable mark-ups established between the segments.

Identifiable assets by segment are those assets used in the respective reportable segment’s operations.

Corporate assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other assets.

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

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

Recent Acquisitions

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Mitchell1 Repair and service information, shop management systems and business services

Mountz Torque tools

Nexiq Diagnostic tools, information and program distributions for fleet and heavy duty equipment

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

Snap-on’s OEM facilitation business provides OEMs with products and services including special and essential tools as well as consulting and facilitation services, which include product procurement, distribution and administrative support to customers for their dealership equipment programs.

The market for vehicle service and repair is driven by an increasing rate of technological change, car and truck population growth and increasing unit life, and the resulting effects of these changes on the businesses of both our suppliers and customers.

In recent years, there has been an increase in the development and sales of electric and hybrid vehicles and this trend is expected to continue.

Snap-on’s OEM facilitation business provides OEMs and OEM dealerships with products and services including special and essential tools as well as consulting and facilitation services, which are comprised of product procurement, distribution and administrative support for dealership equipment programs.

The market for vehicle service and repair is driven by an accelerating rate of technological change, car and truck population growth and increasing unit age, and the resulting effects of these changes on both our suppliers and customers.

Snap-on has historically benefited from the increasing complexity of car and truck fleets and the changing tools, technologies and data needed to monitor, calibrate, service and repair evolving vehicle platforms.

While new technologies, including those associated with alternative energy drivetrains and greater vehicle autonomy, may alter the nature of certain service and repair for particular vehicle types, we believe many of these new technologies provide opportunities to fulfill requirements for enhanced solutions or increased precision.

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

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The industrial sector for Snap-on focuses on providing value-added products and services to an increasingly expanding global base of customers in critical industries.

SNAP-ON INCORPORATED

The industrial sector is characterized by a highly competitive environment with multiple suppliers offering either a full line or industry-specific portfolios for tools and equipment.

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Snap-on believes it is a meaningful participant in the industrial tools and equipment market sector.

SNAP-ON INCORPORATED

Distribution Channels

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Franchise fee revenue totaled $18.7 million, $18.4 million and $17.3 million in fiscal 2023, 2022 and 2021, respectively.

In addition to its mobile van channel in the United States, Snap-on has franchise distribution models in certain other countries, including Canada, the United Kingdom, Japan, Australia, Germany, Netherlands, South Africa, New Zealand, Belgium and Ireland.

In many of these markets, as in the United States, purchase decisions are generally made or influenced by professional vehicle service technicians as well as repair shop owners and managers.

Snap-on also has a company-owned route program that is designed to:

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(ii) service customers in select new and/or open routes not currently serviced by franchisees;

and (iii) allow Snap‑on to pilot new sales and promotional ideas prior to introducing them to franchisees.

and (iii) allow Snap‑on to pilot new sales and promotional ideas before introducing them to franchisees.

As of 2023 year end, company-owned routes comprised approximately 5% of the total route population.

Snap-on may elect to increase or reduce the number of company-owned routes in the future.

In many of these markets, as in the United States, purchase decisions are generally made or influenced by professional vehicle service technicians as well as repair shop owners and managers.

As of 2022 year end, Snap-on’s worldwide route count was approximately 4,725, including approximately 3,400 routes in the United States.

As of 2023 year end, Snap-on’s total route count was approximately 4,700, including approximately 3,400 routes in the United States.

Through SOC, financing is available to U.S.

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Company Direct Sales

A significant proportion of shop equipment sales in North America under the John Bean, Hofmann, Blackhawk, Car-O-Liner, Challenger and Pro-Cut brands, diagnostic products under the Snap-on brand, and information and shop management products under the Mitchell1 brand are made by direct and independent sales forces that have responsibility for national and other accounts.

A significant proportion of shop equipment sales in North America under the Blackhawk, Car-O-Liner, Challenger, Hofmann, John Bean and Pro-Cut brands, diagnostic products under the Snap-on brand, and information and shop management products under the Mitchell1 brand are made by direct and independent sales forces that have responsibility for national and other accounts.

As the vehicle service and repair sector consolidates (with more business conducted by national chains and franchised service centers), Snap-on believes these larger organizations can be serviced most effectively by sales people who can demonstrate and sell the full line of diagnostics, equipment, and services.

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

2022 ANNUAL REPORT 9

Snap-on brand tools and equipment are marketed to industrial and governmental customers worldwide through both industrial sales associates and independent distributors.

1 unchanged sentence

As of 2023 year end, Snap-on had industrial sales associates and independent distributors primarily in the United States, Canada and in various European, Latin American, Middle Eastern, Asian and African countries, with the United States representing the majority of Snap-on’s total industrial sales.

2023 ANNUAL REPORT 9

Snap-on also sells software, services and solutions to the automotive, commercial, heavy duty, agriculture, power equipment and power sports segments.

Products and services are marketed to targeted groups, including OEMs and their dealerships, fleets and individual repair shops.

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

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

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

Hand tools marketed under the BAHCO, Irimo, Lindström, CDI, ATI, Fastorq, Norbar, Sioux, Sturtevant Richmont and Williams brands and trade names, for example, are sold through distributors worldwide.

Hand tools marketed under the ATI, BAHCO, CDI, Fastorq, Irimo, Lindström, Mountz, Norbar, Sioux, Sturtevant Richmont and Williams brands and trade names, for example, are sold through distributors worldwide.

Asset and tool control solutions are sold under the AutoCrib brand primarily through distributors worldwide.

Wheel service and other vehicle service equipment are sold through distributors primarily under brands including Hofmann, John Bean, Car-O-Liner, Challenger, Pro-Cut, Cartec, Blackhawk and Ecotechnics.

Diagnostics and equipment products are marketed through distributors in South America and Asia, and through both a direct sales force and distributors in Europe under the Snap-on, Sun and Blue-Point brands.

Wheel service and other vehicle service equipment are sold through distributors primarily under brands including Blackhawk, Car-O-Liner, Cartec, Challenger, Ecotechnics, Hofmann, John Bean, and Pro-Cut.

Snap-on offers current and prospective customers online access to research and purchase products through its public website, www.snapon.com .

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

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

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

Various competitors target and sell to professional technicians in the vehicle service and repair sector through the mobile tool distribution channel.

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

While the company does experience raw material and component cost fluctuations, as well as availability variations from time to time and from operation to operation, including due to the ongoing COVID-19 pandemic and its impact on the global supply chain, Snap-on endeavors to employ its RCI processes to improve efficiencies and reduce waste to minimize the impact of any cost increases.

The company does not currently anticipate experiencing any significant impact in 2023 from raw material and purchased component cost or availability issues.

SNAP-ON INCORPORATED

While the company does experience raw material and component cost fluctuations, as well as availability variations from time to time and from operation to operation, Snap-on endeavors to employ its RCI processes to improve efficiencies and reduce waste to minimize the impact of any cost increases.

The company does not currently anticipate any significant impact in 2024 from raw material and purchased component cost or availability issues.

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

SNAP-ON INCORPORATED

Patents, Trademarks and Other Intellectual Property

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Sales relating to any single patent did not represent a material portion of Snap-on’s revenues in any of the last three years.

Examples of products that have features or designs that benefit from patent protection include hand tools (including sealed ratchets and ratcheting screwdrivers), power tools, wheel alignment systems, wheel balancers, tire changers, vehicle lifts, tool storage, tool control, collision measurement, test lane equipment, brake lathes, electronic torque instruments, emissions-sensing devices and diagnostic equipment.

Examples of products that have features or designs that benefit from patent protection include hand tools, power tools, wheel alignment systems, wheel balancers, tire changers, vehicle lifts, tool storage, tool control, collision measurement, test lane equipment, brake lathes, electronic torque instruments, emissions-sensing devices and diagnostic equipment.

Much of the technology used in the manufacture of vehicle service tools and equipment is in the public domain.

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As of December 30, 2023, Snap-on employed approximately 13,200 people worldwide, of which approximately 7,500 were employed in the United States and approximately 5,700 were outside the United States.

Based on Snap-on’s most recently filed EEO-1 data, which is available under “ESG Reporting” in the “Investors” section of the company’s website at www.snapon.com , females constitute 26.0% and minorities constitute 23.5% of the company’s workforce in the United States.

Based on Snap-on’s most recently filed EEO-1 data, which is available under “ESG Reporting” in the “Investors” section of the company’s website at www.snapon.com , females constitut e 26.4% and minorities constitute 25.2% of th e company’s workforce in the United States.

Additionally, on a global basis, approximately 2,700 employees are represented by unions and/or covered under collective bargaining agreements with varying expiration dates through 2026.

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

2022 ANNUAL REPORT 11

Snap-on is guided by the beliefs and values in the company’s “Who We Are” mission statement and strives to be the “employer of choice” for its current and future associates.

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Furthermore, through our Snap-on Value Creation Processes, a suite of principles we use every day, the company remains committed to the areas of safety, quality, customer connection, innovation and RCI, which are closely linked to and contribute to improving employee engagement, productivity, and efficiency.

2023 ANNUAL REPORT 11

Successful execution of our way forward is dependent on attracting, developing and retaining key employees and members of our management team, which we achieve through the following:

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Snap-on invests in its strong safety culture and in elevating the importance of worker safety throughout all levels of the organization.

For 2022, Snap-on had an overall safety incident rate of 1.12 (number of injuries and illnesses multiplied by 200,000, divided by hours worked).

• Snap-on is committed to its employees and provides developmental opportunities, as well as competitive pay and benefits.

For 2023, Snap-on had an overall safety incident rate of 1.16 (nu mber of injuries and illnesses multiplied by 200,000, divided by hours worked).

• Snap-on is committed to its employees and provides developmental opportunities throughout the organization.

Leadership reviews to identify high potential talent in the organization are conducted on an ongoing basis with all business units and on an annual basis with the Board of Directors.

Snap-on offers pension, postretirement health care benefits and stock-based compensation as well as other stock plans, including an employee stock purchase plan for associates in the United States and Canada.

Snap-on offers competitive compensation and benefits to its employees, including performance-based and stock-based management incentive plans, an employee stock purchase plan for associates in the U.S.

and Canada, as well as pension plans covering most U.S.

employees and certain employees in foreign countries.

Additional information related to these plans is included in Notes 11 and 13 to the Consolidated Financial Statements.

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

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

Annual employee training is used to reinforce ethics, environmental matters, health and safety, human rights, informatio n/cyber security and regulatory compliance, which includes anti-corruption training for all relevant employees.

Social Responsibility and Sustainability Commitment

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Snap-on has adopted policies that seek to eliminate human trafficking, slavery, forced labor and child labor from its global supply chain, and has formalized its commitment to protecting human rights in the company’s Human Rights Policy.

SNAP-ON INCORPORATED

Snap-on prioritizes continuous improvement in all facets of its operations, including environmental matters and health and safety.

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

In 2022, the company’s total GHG emissions of 101,805 metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of 22.7 (metric tons of CO2e, divided by net sales in millions), which is over 40% lower than when initially reported in 2008.

Snap-on’s sustainability framework is focused on key areas impacting our industry, including energy management, employee health and safety, and material management, and is aligned with the standards of the Value Reporting Foundation (formerly known as the Sustainability Accounting Standards Board or “SASB”), which has been consolidated into the International Financial Reporting Standards Foundation.

Snap-on’s SASB Index is available under “ESG Reporting” in the “Investors” section on the company’s website at www.snapon.com .

In 2023 , the company’s total Scope 1 and Scope 2 GHG emissions of 99,021 metric tons of carbon dioxide equivalent (“CO2e”) reflected an intensity of 20.9 (metric tons of CO2e, divided by net sales in millions).

SNAP-ON INCORPORATED

Snap-on’s sustainability framework is focused on key areas impacting our industry, including energy management, employee health and safety, and material management, and is aligned with the principles of the International Financial Reporting Standards Foundation (formerly known as the Sustainability Accounting Standards Board or “SASB”), which has been consolidated into the International Financial Reporting Standards Foundation.

Snap-on’s SASB Index is available under “ESG Reporting” in the “Investors” section of the company’s website at www.snapon.com .

Feedback on the evaluation of risks and/or opportunities related to ESG matters identified by the company’s internal Environmental, Social and Governance Committee (the “ESGC”) and by the company’s operating units is included and discussed as part of the company’s quarterly operations reviews with senior management.

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

What changed 10-K

Item 1. Business