What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-04-18 compared with 2023-10-19 · 104 added, 242 removed, 292 unchanged (54% of the section changed)

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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.

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.

For those forward-looking statements, Snap-on cautions the reader that numerous important factors, such as those listed below, as well as those factors discussed in its Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (“ 2023 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:

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• Price and supply fluctuations related to raw materials, components and certain purchased finished goods, such as steel, plastics, and electronics;

• 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;

• The effects of external economic factors, including adverse developments in world financial markets, disruptions related to tariffs and other trade or sanction issues, and global supply chain inefficiencies, including as a result of the current war in Ukraine and other regional conflicts;

• Snap-on’s ability to successfully manage changes in prices and the availability of energy sources, including gasoline;

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• The impact of labor interruptions or challenges, and Snap-on’s ability to effectively manage human capital resources;

• Snap-on’s ability to successfully manage planned facility closures or to withstand disruptions from unexpected closures;

• 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;

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• 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.

In addition, investors should be aware that generally accepted accounting principles in the United States of America (“GAAP”) prescribe when a company should reserve for particular risks, including litigation exposures.

Snap-on disclaims any responsibility to update any forward-looking statement provided in this document, except as required by la w.

In ad dition, investors should be aware that generally accepted accounting principles in the United States of America (“GAAP”) prescribe when a company should reserve for particular risks, including litigation exposures.

Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a major contingency.

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Non-GAAP Measures

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.

References in Management’s Discussion and Analysis of Financial Condition and Results of Operations 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.

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RESULTS OF OPERATIONS

Results of operations for the three months ended September 30, 2023, and October 1, 2022, are as follows:

Results of operations for the three months ended March 30, 2024, and April 1, 2023, are as follows:

Three Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

(Amounts in millions) March 30, 2024 April 1, 2023 Change

Net sales $ 1,182.3 100.0 % $ 1,183.0 100.0 % $ (0.7) (0.1) %

17 unchanged sentences

All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.

Net sales of $1,159.3 million in the third quarter of 2023 represented an increase of $56.8 million, or 5.2%, from 2022 levels, reflecting a $52.4 million, or 4.7%, organic gain and $4.4 million of favorable foreign currency translation.

Gross profit of $578.2 million in the third quarter of 2023 compared to $532.6 million last year, an increase of $45.6 million or 8.6%.

Gross margin (gross profit as a percentage of net sales) in the quarter improved 160 basis points (100 basis points (“bps”) equals 1.0 percent) from the third quarter of 2022 primarily due to increased sales volumes and pricing actions , lower material and other costs, and benefits from the company’s “Rapid Continuous Improvement” or “RCI” initiatives.

These improvements were partially offset by 50 bps of unfavorable foreign currency effects.

Net sales of $1,182.3 million in the first quarter of 2024 represented a decrease of $0.7 million, or 0.1%, from 2023 levels, reflecting a $9.9 million, or 0.8%, organic decline, partially offset by $6.7 million of acquisition-related sales and $2.5 million of favorable foreign currency translation.

Gross profit of $596.7 million in the first quarter of 2024 compared to $589.6 million last year, an increase of $7.1 million or 1.2%.

Gross margin (gross profit as a percentage of net sales) in the quarter improved 70 basis points (100 basis points (“bps”) equals 1.0 percent) from the first quarter of 2023 primarily due to lower material and other costs, and benefits from the company’s “Rapid Continuous Improvement” or “RCI” initiatives.

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.

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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.

Operating expenses of $333.0 million in the third quarter of 2023 compared to $309.1 million in 2022.

Operating expenses as a percentage of net sales rose 70 bps from last year primarily reflecting increased personnel and other costs.

Operating earnings before financial services of $245.2 million in the third quarter of 2023 compared to $223.5 million in 2022, an increase of $21.7 million or 9.7%.

Operating expenses of $325.8 million in the first quarter of 2024, including an $11.3 million benefit for payments received associated with a legal matter (the “legal payment”), compared to $329.8 million last year.

Operating expenses as a percentage of net sales improved 20 bps from last year, primarily reflecting the benefit from the legal payment, partially offset by increased personnel and other costs.

Operating earnings before financial services of $270.9 million in the first quarter of 2024, including an $11.3 million benefit from the legal payment, compared to $259.8 million in the first quarter of 2023.

As a percentage of net sales, operating earnings before financial services were 22.9% compared to 22.0% last year.

Financial services revenue of $94.9 million in the third quarter of 2023 compared to $87.3 million last year.

Financial services operating earnings of $69.4 million in the period compared to $66.4 million in 2022.

SNAP-ON INCORPORATED

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OF OPERATIONS

Operating earnings of $314.6 million in the third quarter of 2023 compared to $289.9 million in 2022, an increase of $24.7 million or 8.5%.

As a percentage of revenues (net sales plus financial services revenue), operating earnings of 25.1% in the quarter compared to 24.4% last year.

Interest expense in the third quarter of 2023 increased $0.6 million compared to last year.

See Note 7 to the Condensed Consolidated Financial Statements for additional information on debt and credit facilities.

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.

See Note 15 to the Condensed Consolidated Financial Statements for additional information on Other income (expense) – net.

The effective income tax rate on earnings attributable to Snap-on was 22.6% in the third quarter of 2023 and 21.6% in the third quarter of 2022.

S ee Note 6 to the Condensed Consolidated Financial Statements for additional information on income taxes.

Net earnings attributable to Snap-on of $243.1 million, or $4.51 per diluted share, in the third quarter of 2023 compared to $223.9 million, or $4.14 per diluted share, in the third quarter of 2022, an increase of $19.2 million or $0.37 per diluted share.

Results of operations for the nine months ended September 30, 2023, and October 1, 2022, are as follows:

Nine Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

Net sales $ 3,533.6 100.0 % $ 3,336.9 100.0 % $ 196.7 5.9 %

Cost of goods sold (1,762.1) (49.9) % (1,716.5) (51.4) % (45.6) (2.7) %

Gross profit 1,771.5 50.1 % 1,620.4 48.6 % 151.1 9.3 %

Operating expenses (989.5) (28.0) % (927.2) (27.8) % (62.3) (6.7) %

Operating earnings before financial services 782.0 22.1 % 693.2 20.8 % 88.8 12.8 %

Financial services revenue 280.9 100.0 % 261.4 100.0 % 19.5 7.5 %

Financial services expenses (78.3) (27.9) % (59.3) (22.7) % (19.0) (32.0) %

Operating earnings from financial services 202.6 72.1 % 202.1 77.3 % 0.5 0.2 %

Operating earnings 984.6 25.8 % 895.3 24.9 % 89.3 10.0 %

Interest expense (37.4) (1.0) % (35.1) (1.0) % (2.3) (6.6) %

Other income (expense) – net 50.0 1.3 % 30.7 0.9 % 19.3 62.9 %

Earnings before income taxes 997.2 26.1 % 890.9 24.8 % 106.3 11.9 %

Income tax expense (223.9) (5.8) % (201.5) (5.6) % (22.4) (11.1) %

Net earnings 773.3 20.3 % 689.4 19.2 % 83.9 12.2 %

Net earnings attributable to noncontrolling interests (17.5) (0.5) % (16.6) (0.5) % (0.9) (5.4) %

Net earnings attributable to Snap-on Inc.

$ 755.8 19.8 % $ 672.8 18.7 % $ 83.0 12.3 %

Percentage Disclosure:

All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.

Net sales of $3,533.6 million in the first nine months of 2023 represented an increase of $196.7 million, or 5.9%, from 2022 levels, reflecting a $224.6 million, or 6.8%, organic gain, partially offset by $27.9 million of unfavorable foreign currency translation.

Gross profit of $1,771.5 million in the first nine months of 2023 compared to $1,620.4 million last year, an increase of $151.1 million or 9.3%.

Gross margin improved 150 bps from 2022 primarily due to increased sales volume s and pricing actions, lower material and other costs, and benefits from the company’s RCI initiatives.

These improvements were partially offset by 40 bps of unfavorable foreign currency effects.

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Operating expenses of $989.5 million in the first nine months of 2023 compared to $927.2 million last year.

Operating expenses as a percentage of net sales rose 20 bps from last year primarily reflecting increased personnel and other costs, partially offset by benefits from higher sales volumes.

Operating earnings before financial services of $782.0 million in the first nine months of 2023 compared to $693.2 million in 2022, an increase of $88.8 million or 12.8%.

As a percentage of net sales, operating earnings before financial services were 22.1% compared to 20.8% last year.

Financial services revenue of $280.9 million in the first nine months of 2023 compared to $261.4 million last year.

Financial services revenue of $99.6 million in the first quarter of 2024 compared to $92.6 million last year.

Financial services operating earnings of $68.3 million in the period compared to $66.3 million in 2023.

Operating earnings of $984.6 million in the first nine months of 2023 compared to $895.3 million in 2022, an increase of $89.3 million or 10.0%.

As a percentage of revenues, operating earnings of 25.8% compared to 24.9% last year.

Interest expense in the first nine months of 2023 increased $2.3 million compared to last year.

Operating earnings of $339.2 million in the first quarter of 2024, including an $11.3 million benefit from the legal payment, compared to $326.1 million last year, an increase of $13.1 million or 4.0%.

As a percentage of revenues (net sales plus financial services revenue), operating earnings of 26.5% in the quarter compared to 25.6% last year.

Interest expense in the first quarter of 2024 increased $0.1 million compared to last year.

See Note 8 to the Condensed Consolidated Financial Statements for additional information on debt and credit facilities.

Other income (expense) – net primarily includes interest income, non-service components of net periodic benefit costs, and net gains and losses associated with hedging and currency exchange rate transactions.

See Note 16 to the Condensed Consolidated Financial Statements for additional information on Other income (expense) – net.

The effective income tax rate on earnings attributable to Snap-on was 22.9% in the first nine months of 2023 and 23.0% in 2022.

The effective income tax rate on earnings attributable to Snap-on was 22.2% in the first quarter of 2024 and 23.1% in the first quarter of 2023.

S ee Note 7 to the Condensed Consolidated Financial Statements for additional information on income taxes.

Net earnings attributable to Snap-on of $755.8 million, or $14.00 per diluted share, in the first nine months of 2023 compared to $672.8 million, or $12.41 per diluted share, in 2022, an increase of $83.0 million or $1.59 per diluted share.

Net earnings attributable to Snap-on of $263.5 million, or $4.91 per diluted share, in the first quarter of 2024, including an $8.8 million, or $0.16 per diluted share, after-tax benefit from the legal payment, compared to $248.7 million, or $4.60 per diluted share, in the first quarter of 2023.

Segment Results

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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.

Financial Services consists of the business operations of Snap-on’s finance subsidiaries.

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.

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

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Commercial & Industrial Group

Three Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

External net sales $ 280.5 76.6 % $ 262.8 73.7 % $ 17.7 6.7 %

Intersegment net sales 85.9 23.4 % 94.0 26.3 % (8.1) (8.6) %

Segment net sales 366.4 100.0 % 356.8 100.0 % 9.6 2.7 %

Cost of goods sold (223.4) (61.0) % (225.0) (63.1) % 1.6 0.7 %

Gross profit 143.0 39.0 % 131.8 36.9 % 11.2 8.5 %

Operating expenses (84.9) (23.1) % (79.5) (22.2) % (5.4) (6.8) %

Segment operating earnings $ 58.1 15.9 % $ 52.3 14.7 % $ 5.8 11.1 %

Segment net sales of $366.4 million in the third quarter of 2023 represented an increase of $9.6 million, or 2.7%, from 2022 levels, reflecting an $11.2 million, or 3.2%, organic sales gain, partially offset by $1.6 million of unfavorable foreign currency translation.

The organic increase is primarily due to a double-digit gain in sales to customers in critical industries, partially offset by a double-digit decline in the segment’s Asia Pacific operations.

Segment gross margin in the third quarter improved 210 bps from last year, primarily reflecting increased sales volumes in the higher-gross-margin critical industry sector, pricing actions, and benefits from the segment’s RCI initiatives.

These improvements were partially offset by 60 bps of unfavorable foreign currency effects.

Segment operating expenses as a percentage of sales in the third quarter rose 90 bps as compared to 2022 primarily due to increased sales in higher-expense businesses, as well as increased personnel and other costs.

As a result of these factors, segment operating earnings of $58.1 million in the third quarter of 2023, including $2.9 million of unfavorable foreign currency effects, compared to $52.3 million in 2022, an increase of $5.8 million or 11.1%.

Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.9% in the third quarter of 2023 compared to 14.7% in 2022.

Nine Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

(Amounts in millions) March 30, 2024 April 1, 2023 Change

External net sales $ 291.0 80.9 % $ 278.6 76.6 % $ 12.4 4.5 %

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Segment operating earnings $ 55.4 15.4 % $ 55.8 15.3 % $ (0.4) (0.7) %

Segment net sales of $1,094.4 million in the first nine months of 2023 represented an increase of $38.4 million, or 3.6%, from 2022 levels, reflecting a $58.1 million, or 5.6%, organic sales gain, partially offset by $19.7 million of unfavorable foreign currency translation.

The organic increase primarily reflects a double-digit gain in sales to customers in critical industries.

Segment gross margin in the first nine months improved 220 bps from last year, primarily due to increased sales volumes in the higher-gross-margin critical industry sector, pricing actions, and benefits from the segment’s RCI initiatives.

These improvements were partially offset by 30 bps of unfavorable foreign currency effects.

Segment operating expenses as a percentage of sales in the first nine months rose 70 bps as compared to 2022 primarily reflecting increased sales in higher-expense businesses.

SNAP-ON INCORPORATED

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OF OPERATIONS

As a result of these factors, segment operating earnings of $172.0 million in the first nine months of 2023, including $7.6 million of unfavorable foreign currency effects, compared to $149.7 million in 2022, an increase of $22.3 million or 14.9%.

Operating margin for the Commercial & Industrial Group of 15.7% in the first nine months of 2023 compared to 14.2% in 2022.

Segment net sales of $359.9 million in the first quarter of 2024 represented a decrease of $3.9 million, or 1.1%, from 2023 levels, reflecting a $9.2 million, or 2.5%, organic sales decline and $1.4 million of unfavorable foreign currency translation, partially offset by $6.7 million of acquisition-related sales.

The organic decrease is primarily due to a double-digit reduction in the segment’s power tools business and a high single-digit decline in the segment’s Asia-Pacific operations, partially offset by a mid single-digit gain in sales to customers in critical industries.

Segment gross margin in the first quarter improved 200 bps from last year, primarily reflecting increased sales volumes in the higher-gross-margin critical industry sector, lower material and other costs, savings from the segment’s RCI initiatives, and 50 bps of benefits from acquisitions.

Segment operating expenses as a percentage of sales in the first quarter rose 190 bps as compared to 2023 primarily due to the effects of lower sales volumes, increased personnel and other costs, and a 70 bps impact from acquisitions.

As a result of these factors, segment operating earnings of $55.4 million in the first quarter of 2024 compared to $55.8 million in 2023, a decrease of $0.4 million or 0.7%.

Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.4% in the first quarter of 2024 compared to 15.3% in 2023.

Snap-on Tools Group

Three Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

Segment net sales $ 515.4 100.0 % $ 496.6 100.0 % $ 18.8 3.8 %

Cost of goods sold (276.8) (53.7) % (273.4) (55.1) % (3.4) (1.2) %

Gross profit 238.6 46.3 % 223.2 44.9 % 15.4 6.9 %

Operating expenses (125.2) (24.3) % (121.0) (24.3) % (4.2) (3.5) %

Segment operating earnings $ 113.4 22.0 % $ 102.2 20.6 % $ 11.2 11.0 %

Segment net sales of $515.4 million in the third quarter of 2023 represented an increase of $18.8 million, or 3.8%, from 2022 levels, reflecting an $18.3 million, or 3.7%, organic sales gain and $0.5 million of favorable foreign currency translation.

The organic increase is due to a double-digit gain in the segment’s international operations and a low single-digit increase in the U.S.

Segment gross margin in the third quarter improved 140 bps from last year primarily reflecting increased sales volumes and pricing actions, and benefits from the segment’s RCI initiatives .

These improvements were partially offset by 50 bps of unfavorable foreign currency effects.

Segment operating expenses as a percentage of net sales in the third quarter was unchanged from last year with benefits from higher sales volumes offset by increased personnel and other costs.

As a result of these factors, segment operating earnings of $113.4 million in the third quarter of 2023, including $2.7 million of unfavorable foreign currency effects, compared to $102.2 million in 2022, an increase of $11.2 million or 11.0%.

Operating margin for the Snap-on Tools Group of 22.0% in the third quarter of 2023 compared to 20.6% last year.

Nine Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

(Amounts in millions) March 30, 2024 April 1, 2023 Change

Segment net sales $ 500.1 100.0 % $ 537.0 100.0 % $ (36.9) (6.9) %

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Segment operating earnings $ 117.3 23.5 % $ 131.7 24.5 % $ (14.4) (10.9) %

Segment net sales of $1,575.5 million in the first nine months of 2023 represented an increase of $46.2 million, or 3.0%, from 2022 levels, reflecting a $56.0 million, or 3.7%, organic sales gain, partially offset by $9.8 million of unfavorable foreign currency translation.

The organic increase is due to a low single-digit gain in the U.S.

operations and a high single-digit increase in the segment’s international operations.

Segment gross margin in the first nine months improved 200 bps from last year primarily reflecting increased sales volumes and pricing actions, lower material and other costs, and benefits from the segment’s RCI initiatives.

These improvements were partially offset by 60 bps of unfavorable foreign currency effects.

Segment operating expenses as a percentage of net sales in the first nine months rose 10 bps from last year primarily due to increased personnel and other costs, mostly offset by benefits from higher sales volumes.

As a result of these factors, segment operating earnings of $382.8 million in the first nine months of 2023, including $12.4 million of unfavorable foreign currency effects, compared to $342.6 million in 2022, an increase of $40.2 million or 11.7%.

Operating margin for the Snap-on Tools Group of 24.3% in the first nine months of 2023 compared to 22.4% last year.

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Segment net sales of $500.1 million in the first quarter of 2024 represented a decrease of $36.9 million, or 6.9%, from 2023 levels, reflecting a $37.5 million, or 7.0%, organic sales decline, partially offset by $0.6 million of favorable foreign currency translation.

The organic decrease is due to a high single-digit decline in the U.S., partially offset by a mid single-digit gain in the segment’s international operations.

Segment gross margin in the first quarter improved 90 bps from last year, primarily reflecting decreased sales of lower-gross-margin products.

Segment operating expenses as a percentage of net sales in the first quarter rose 190 bps as compared to 2023 primarily due to the lower sales volumes.

As a result of these factors, segment operating earnings of $117.3 million in the first quarter of 2024 compared to $131.7 million in 2023, a decrease of $14.4 million or 10.9%.

Operating margin for the Snap-on Tools Group of 23.5% in the first quarter of 2024 compared to 24.5% last year.

Repair Systems & Information Group

Three Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

External net sales $ 363.4 84.2 % $ 343.1 82.9 % $ 20.3 5.9 %

Intersegment net sales 68.4 15.8 % 70.9 17.1 % (2.5) (3.5) %

Segment net sales 431.8 100.0 % 414.0 100.0 % 17.8 4.3 %

Cost of goods sold (235.2) (54.5) % (236.4) (57.1) % 1.2 0.5 %

Gross profit 196.6 45.5 % 177.6 42.9 % 19.0 10.7 %

Operating expenses (91.7) (21.2) % (82.2) (19.9) % (9.5) (11.6) %

Segment operating earnings $ 104.9 24.3 % $ 95.4 23.0 % $ 9.5 10.0 %

Segment net sales of $431.8 million in the third quarter of 2023 represented an increase of $17.8 million, or 4.3%, from 2022 levels, reflecting a $13.0 million, or 3.1%, organic sales gain and $4.8 million of favorable foreign currency translation.

The organic increase includes a high single-digit gain in sales of undercar equipment and a low single-digit increase in sales of diagnostic and repair information products to independent repair shop owners and managers, partially offset by a low single-digit decline in activity with OEM dealerships.

Segment gross margin in the third quarter improved 260 bps from last year primarily due to lower material and other costs, increased sales volumes, and savings from RCI initiatives.

Segment operating expenses as a percentage of net sales in the third quarter rose 130 bps from 2022 primarily reflecting increased personnel and other costs.

As a result of these factors, segment operating earnings of $104.9 million in the third quarter of 2023, including $0.2 million of favorable foreign currency effects, compared to $95.4 million in 2022, an increase of $9.5 million or 10.0%.

Operating margin for the Repair Systems & Information Group of 24.3% in the third quarter of 2023 compared to 23.0% last year.

Nine Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

(Amounts in millions) March 30, 2024 April 1, 2023 Change

External net sales $ 391.2 84.3 % $ 367.4 82.3 % $ 23.8 6.5 %

5 unchanged sentences

Segment operating earnings $ 112.9 24.3 % $ 104.6 23.4 % $ 8.3 7.9 %

Segment net sales of $1,330.4 million in the first nine months of 2023 represented an increase of $101.4 million, or 8.3%, from 2022 levels, reflecting a $102.9 million, or 8.4%, organic sales increase, partially offset by $1.5 million of unfavorable foreign currency translation.

The organic gain includes double-digit increases in sales of undercar equipment, high single-digit gains 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.

Segment gross margin in the first nine months improved 120 bps from last year primarily due to increased sales volumes and pricing actions, lower material and other costs, and savings from RCI initiatives.

Segment operating expenses as a percentage of net sales in the first nine months rose 20 bps from 2022, primarily reflecting increased personnel and other costs, partially offset by benefits from sales volume leverage.

SNAP-ON INCORPORATED

1 unchanged sentence

OF OPERATIONS

As a result of these factors, segment operating earnings of $319.9 million in the first nine months of 2023, including $0.9 million of favorable foreign currency effects, compared to $282.7 million in 2022, an increase of $37.2 million or 13.2%.

Operating margin for the Repair Systems & Information Group of 24.0% in the first nine months of 2023 compared to 23.0% last year.

Segment net sales of $463.8 million in the first quarter of 2024 represented an increase of $17.2 million, or 3.9%, from 2023 levels, reflecting a $14.7 million, or 3.3%, organic sales gain and $2.5 million of favorable foreign currency translation.

The organic increase primarily reflects high single-digit gains in activity with OEM dealerships and low single-digit increases in sales of undercar equipment.

Segment gross margin in the first quarter improved 150 bps from last year primarily due to lower material and other costs, and savings from RCI initiatives.

Segment operating expenses as a percentage of net sales in the first quarter rose 60 bps from 2023, primarily reflecting increased personnel and other costs.

As a result of these factors, segment operating earnings of $112.9 million in the first quarter of 2024 compared to $104.6 million in 2023, an increase of $8.3 million or 7.9%.

Operating margin for the Repair Systems & Information Group of 24.3% in the first quarter of 2024 compared to 23.4% last year.

Financial Services

Three Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

(Amounts in millions) March 30, 2024 April 1, 2023 Change

Financial services revenue $ 99.6 100.0 % $ 92.6 100.0 % $ 7.0 7.6 %

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.

Financial services revenue of $94.9 million in the third quarter of 2023 increased $7.6 million, or 8.7%, from last year.

In the third quarters of both 2023 and 2022, the average yield on finance receivables was 17.7%.

In the third quarters of 2023 and 2022, the average yields on contract receivables were 8.8% and 8.6%, respectively.

Originations of $305.2 million in the third quarter of 2023 represented an increase of $5.0 million, or 1.7%, from 2022 levels.

Financial services revenue of $99.6 million in the first quarter of 2024 increased $7.0 million, or 7.6%, from last year.

In the first quarters of both 2024 and 2023, the average yield on finance receivables was 17.7%.

In the first quarters of 2024 and 2023, the average yields on contract receivables were 9.0% and 8.7%, respectively.

Originations of $301.7 million in the first quarter of 2024 represented an increase of $0.8 million, or 0.3%, from 2023 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.

Financial services expenses in the third quarter of 2023 increased primarily due to higher provisions for credit losses as compared to those recorded in the third quarter of 2022.

As a percentage of the average financial services portfolio, expenses were 1.1% in the third quarter of 2023 and 0.9% in 2022.

Segment operating earnings in the third quarter of 2023 increased $3.0 million, or 4.5%, from 2022 levels.

Nine Months Ended

(Amounts in millions) September 30, 2023 October 1, 2022 Change

Financial services revenue $ 280.9 100.0 % $ 261.4 100.0 % $ 19.5 7.5 %

Financial services expenses (78.3) (27.9) % (59.3) (22.7) % (19.0) (32.0) %

Segment operating earnings $ 202.6 72.1 % $ 202.1 77.3 % $ 0.5 0.2 %

Financial services revenue of $280.9 million in the first nine months of 2023 increased $19.5 million, or 7.5%, from 2022.

In the first nine months of 2023 and 2022, the respective average yields on finance receivables were 17.7% and 17.6%.

In the first nine months of 2023 and 2022, the average yields on contract receivables were 8.7% and 8.5%, respectively.

Originations of $932.4 million in the first nine months of 2023 represented an increase of $79.0 million, or 9.3%, from 2022 levels.

Financial services expenses in the first nine months of 2023 increased primarily due to higher provisions for credit losses as compared to those recorded in 2022.

As a percentage of the average financial services portfolio, expenses were 3.3% in the first nine months of 2023 and 2.7% in the same period in 2022.

Segment operating earnings in the first nine months of 2023, including $0.8 million of unfavorable foreign currency effects, increased $0.5 million, or 0.2%, from 2022 levels.

Snap-on’s third quarter 2023 general corporate expenses of $31.2 million compared to $26.4 million last year.

For the first nine months of 2023, expenses of $92.7 million compared to $81.8 million recorded in 2022.

The year-over-year increases in corporate expenses in 2023 for both periods primarily reflect higher stock-based and performance-based compensation.

Financial services expenses in the first quarter of 2024 increased primarily due to higher provisions for credit losses as compared to those recorded in the first quarter of 2023.

As a percentage of the average financial services portfolio, expenses were 1.3% in the first quarter of 2024 and 1.1% in 2023.

Segment operating earnings in the first quarter of 2024 increased $2.0 million, or 3.0%, from 2023 levels.

Snap-on’s first quarter 2024 general corporate expenses of $14.7 million compared to $32.3 million last year.

The year-over-year decrease in corporate expenses primarily reflects a benefit from the legal payment and lower performance-based compensation and other costs.

SNAP-ON INCORPORATED

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and international financial services businesses.

Transactions between the Operations and Financial Services businesses were eliminated to arrive at the Condensed Consolidated Financial Statements.

Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the three months ended September 30, 2023, and October 1, 2022, is as follows:

Operations* Financial Services

(Amounts in millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Net sales $ 1,159.3 $ 1,102.5 $ — $ —

Cost of goods sold (581.1) (569.9) — —

Gross profit 578.2 532.6 — —

Operating expenses (333.0) (309.1) — —

Operating earnings before financial services 245.2 223.5 — —

Financial services revenue — — 94.9 87.3

Financial services expenses — — (25.5) (20.9)

Operating earnings from financial services — — 69.4 66.4

Operating earnings 245.2 223.5 69.4 66.4

Interest expense (12.4) (11.7) — (0.1)

Intersegment interest income (expense) – net 16.1 14.7 (16.1) (14.7)

Other income (expense) – net 17.9 13.0 0.1 0.1

Earnings before income taxes and equity earnings 266.8 239.5 53.4 51.7

Income tax expense (57.3) (48.4) (13.8) (13.3)

Earnings before equity earnings 209.5 191.1 39.6 38.4

Financial services – net earnings attributable to Snap-on 39.6 38.4 — —

Net earnings 249.1 229.5 39.6 38.4

Net earnings attributable to noncontrolling interests (6.0) (5.6) — —

Net earnings attributable to Snap-on $ 243.1 $ 223.9 $ 39.6 $ 38.4

* Snap-on with Financial Services presented on the equity method.

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the nine months ended September 30, 2023, and October 1, 2022, is as follows:

Transactions between the Operations and Financial Services businesses are eliminated to arrive at the Condensed Consolidated Financial Statements.

Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the three months ended March 30, 2024, and April 1, 2023, is as follows:

Operations* Financial Services

(Amounts in millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

(Amounts in millions) March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Net sales $ 1,182.3 $ 1,183.0 $ — $ —

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OF OPERATIONS

Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Balance Sheet information as of September 30, 2023, and December 31, 2022, is as follows:

Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Balance Sheet information as of March 30, 2024, and December 30, 2023, is as follows:

Operations* Financial Services

(Amounts in millions) September 30,

2023 December 31, 2022 September 30,

(Amounts in millions) March 30,

2024 December 30, 2023 March 30,

2024 December 30, 2023

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Inventories – net 970.5 1,005.9 — —

Prepaid expenses and other assets 124.8 149.2 5.7 5.8

Prepaid expenses and other current assets 140.0 143.2 8.3 7.4

Total current assets 3,081.8 2,962.2 725.6 717.7

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Pension assets 130.4 130.5 — —

Other assets 28.1 27.1 0.2 0.1

Other long-term assets 36.6 30.2 0.2 0.1

Total assets $ 6,453.0 $ 6,338.6 $ 2,450.6 $ 2,430.0

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Operations* Financial Services

(Amounts in millions) September 30,

2023 December 31, 2022 September 30,

(Amounts in millions) March 30,

2024 December 30, 2023 March 30,

2024 December 30, 2023

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Due to Snap-on’s credit rating over the years, external funds have been available at an acceptable cost.

As of October 13, 2023, Snap-on’s long-term debt and commercial paper were rated, respectively, A2 and P-1 by Moody’s Investors Service;

As of April 12, 2024, Snap-on’s long-term debt and commercial paper were rated, respectively, A2 and P-1 by Moody’s Investors Service;

A- and A-2 by Standard & Poor’s;

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The following discussion focuses on information included in the accompanying Condensed Consolidated Balance Sheets.

Working capital (current assets less current liabilities) of $2,623.1 million as of September 30, 2023, represented an increase of $225.8 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.

The following represents the company’s working capital position as of September 30, 2023, and December 31, 2022:

(Amounts in millions) September 30,

Working capital (current assets less current liabilities) of $2,786.4 million as of March 30, 2024, represented an increase of $76.0 million from $2,710.4 million as of December 30, 2023 (fiscal 2023 year end), primarily as a result of the net changes discussed below.

The following represents the company’s working capital position as of March 30, 2024, and December 30, 2023:

(Amounts in millions) March 30,

2024 December 30, 2023

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Inventories – net 970.5 1,005.9

Prepaid expenses and other assets 118.9 144.8

Prepaid expenses and other current assets 135.6 138.4

Total current assets 3,776.1 3,652.0

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Working capital $ 2,786.4 $ 2,710.4

Cash and cash equivalents of $959.3 million as of September 30, 2023, represented an increase of $202.1 million from 2022 year-end levels primarily due to:

Cash and cash equivalents of $1,121.0 million as of March 30, 2024, represented an increase of $119.5 million from 2023 year-end levels primarily due to:

(i) $348.7 million of cash generated from operations;

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and (iv) the funding of $21.8 million of capital expenditures.

Of the $959.3 million of cash and cash equivalents as of September 30, 2023, $359.3 million was held outside of the United States.

Of the $1,121.0 million of cash and cash equivalents as of March 30, 2024, $406.9 million was held outside of the United States.

Snap-on maintains non-U.S.

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OF OPERATIONS

Trade and other accounts receivable – net of $776.8 million as of September 30, 2023, compared to $761.7 million last year, an increase of $15.1 million primarily due to higher sales, partially offset by $3.2 million of foreign currency translation.

Days sales outstanding (trade and other accounts receivable – net as of the respective period end, divided by the respective trailing 12 months sales, times 360 days) was 60 days and 61 days for September 30, 2023, and December 31, 2022, respectively.

The current portions of net finance and contract receivables of $717.1 million as of September 30, 2023, compared to $672.1 million at 2022 year end.

The long-term portions of net finance and contract receivables of $1,645.8 million as of September 30, 2023, compared to $1,554.6 million at 2022 year end.

The combined $136.2 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, partially offset by $2.6 million of foreign currency translation.

Inventories – net of $1,032.9 million as of September 30, 2023, compared to $1,033.1 million last year, a decrease of $0.2 million primaril y due to $9.7 million of foreign currency translation, partially offset by increases resulting from higher demand .

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 September 30, 2023, and December 31, 2022, respectively.

Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 58% and 61% of total inventories as of September 30, 2023, and December 31, 2022, respectively.

Trade and other accounts receivable – net of $827.5 million as of March 30, 2024, compared to $791.3 million as of December 30, 2023, an increase of $36.2 million primarily due to an increase in days sales outstanding, partially offset by $6.9 million of foreign currency translation.

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 63 days and 60 days as of March 30, 2024, and December 30, 2023, respectively.

The current portions of net finance and contract receivables of $721.5 million as of March 30, 2024, compared to $714.9 million at 2023 year end.

The long-term portions of net finance and contract receivables of $1,704.2 million as of March 30, 2024, compared to $1,692.1 million at 2023 year end.

The combined $18.7 million increase in net current and long-term finance and contract receivables over 2023 year-end levels is primarily due to net receivable originations, partially offset by $6.7 million of foreign currency translation.

Inventories – net of $970.5 million as of March 30, 2024, decreased $35.4 million compared to $1,005.9 million as of December 30, 2023, primaril y due to easing supply chain disruptions and $12.5 million of foreign currency translation.

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 2.3 turns as of March 30, 2024, and December 30, 2023, respectively.

Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 59% of total inventories as of both March 30, 2024, and December 30, 2023.

All other inventories are accounted for using the last-in, first-out (“LIFO”) method.

The company’s LIFO reserve was $113.9 million and $108.6 million as of September 30, 2023, and December 31, 2022, respectively.

Notes payable of $17.3 million as of September 30, 2023, compared to $17.2 million as of 2022 year end.

Accounts payable of $284.3 million as of September 30, 2023, compared to $287.0 million last year, a decrease of $2.7 million primarily due to the timing of payments, partially offset by $2.1 million of foreign currency translation.

Other accrued liabilities of $450.7 million as of September 30, 2023, compared to $436.4 million last year, an increase of $14.3 million primarily d ue to higher tax accruals, partially offset by $3.1 million of foreign currency translation.

Long-term debt of $1,184.4 million as of September 30, 2023, consisted of:

The company’s LIFO reserve was $120.6 million and $115.9 million as of March 30, 2024, and December 30, 2023, respectively.

Notes payable of $15.2 million as of March 30, 2024, compared to $15.6 million as of 2023 year end.

Accounts payable of $257.4 million as of March 30, 2024, compared to $238.0 million as of December 30, 2023, an increase of $19.4 million primarily due to the timing of payments, partially offset by $1.9 million of foreign currency translation.

Other accrued liabilities of $505.0 million as of March 30, 2024, compared to $447.4 million as of 2023 year end, an increase of $57.6 million primarily d ue to higher tax accruals, partially offset by $3.7 million of foreign currency translation.

Long-term debt of $1,184.9 million as of March 30, 2024, consisted of:

(i) $300 million of unsecured 3.25% notes that mature on March 1, 2027 (the “2027 Notes”);

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and (iii) $500 million of 3.10% notes that mature on May 1, 2050 (“the 2050 Notes”), partially offset by $15.1 million of unamortized debt issuance costs and issuance discounts.

On September 12, 2023, Snap-on entered into a $900 million multi-currency revolving credit facility that terminates on September 12, 2028 (the “Credit Facility”), which amended and restated in its entirety the company’s previous $800 million multi-currency revolving credit facility that was set to terminate on September 16, 2024.

Snap-on has a $900 million multicurrency revolving credit facility that terminates on September 12, 2028 (the “Credit Facility”).

The Credit Facility contains an accordion feature that, subject to certain customary conditions, may allow the maximum commitment to be increased by up to $450 million with the approval of the lenders providing additional commitments.

No amounts were borrowed or outstanding under either Credit Facility during the nine months ended as of September 30, 2023.

No amounts were borrowed or outstanding under the Credit Facility during the three months ended and as of March 30, 2024.

Borrowings under the Credit Facility bear interest at varying rates based on either:

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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).

As of September 30, 2023, the company’s actual ratios of 0.05 and 0.21 respectively, were both within the permitted ranges set forth in this financial covenant.

As of March 30, 2024, the company’s actual ratios of 0.03 and 0.10, respectively, were both within the permitted ranges set forth in this financial covenant.

Snap-on generally issues commercial paper to fund its financing needs on a short-term basis and uses the Credit Facility as back-up liquidity to support such commercial paper issuances.

As of September 30, 2023, there were no commercial paper issuances outstanding.

As of March 30, 2024, there were no commercial paper issuances outstanding.

SNAP-ON INCORPORATED

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Operating Activities

Net cash provided by operating activities was $857.3 million and $464.6 million in the first nine months of 2023 and 2022, respectively.

Net cash provided by operating activities was $348.7 million and $301.6 million in the first three months of 2024 and 2023, respectively.

The $47.1 million year-over-year increase in net cash provided by operating activities primarily reflects a $26.9 million change in net operating assets and liabilities and an $15.3 million increase in net earnings.

Investing Activities

Net cash used by investing activities of $227.2 million in the first nine months of 2023 included additions to finance receivables of $779.8 million, partially offset by collections of $626.5 million.

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, partially offset by collections of $622.1 million.

Net cash used by investing activities of $63.2 million in the first three months of 2024 included additions to finance receivables of $248.0 million, partially offset by collections of $207.8 million.

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, partially offset by collections of $207.5 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.

Capital expenditures were $73.9 million and $61.5 million in the first nine months of 2023 and 2022, respectively.

Capital expenditures were $21.8 million and $23.0 million in the first three months of 2024 and 2023, 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

Net cash used by financing activities was $423.9 million in the first nine months of 2023.

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.

Proceeds from stock purchase plan and stock option exercises totaled $94.5 million and $41.4 million in the first nine months of 2023 and 2022, respectively.

In the first nine months of 2023, Snap-on repurchased 909,000 shares of its common stock for $233.8 million under its previously announced share repurchase programs.

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.

As of September 30, 2023, Snap-on had remaining availability to repurchase up to an additional $304.5 million in common stock pursuant to its Board’s authorizations.

Net cash used by financing activities was $164.2 million in the first three months of 2024, including a reduction in net short-term borrowings of $0.4 million.

Net cash used by financing activities of $152.1 million in the first three months of 2023 included net short-term borrowings of $0.8 million.

Proceeds from stock purchase plan and stock option exercises totaled $28.3 million and $32.8 million in the first three months of 2024 and 2023, respectively.

In the first three months of 2024, Snap-on repurchased 248,000 shares of its common stock for $70.2 million under its previously announced share repurchase programs.

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.

As of March 30, 2024, Snap-on had remaining availability to repurchase up to an additional $290.6 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.

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Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939.

Cash dividends totaled $257.6 million and $227.1 million in the first nine months of 2023 and 2022, respectively.

Cash dividends totaled $98.2 million and $86.1 million in the first three months of 2024 and 2023, respectively.

On November 2, 2023, the Board increased the quarterly cash dividend by 14.8% to $1.86 per share ($7.44 per share annualized).

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Critical Accounting Policies and Estimates

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.

Snap-on’s critical accounting policies and estimates, which are discussed in its Annual Report on Form 10-K for the fiscal year ended December 30, 2023, have not materially changed since the report was filed.

We believe that our markets and our operations possess and have demonstrated continuing and considerable resilience against the uncertainties of the current environment.

For the remainder of 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.

In pursuit of these initiatives, we project that capital expenditures in 2023 will approximate $100 million, of which $73.9 million was incurred in the first nine months of the year.

Snap-on currently anticipates that its full-year 2023 effective income tax rate will approximate 23%.

In 2024, Snap-on expects to make ongoing progress along its defined runways for coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high.

In pursuit of these initiatives, we project that capital expenditures in 2024 will be in the range of $100 million to $110 million, of which $21.8 million was incurred in the first three months of the year.

Snap-on currently anticipates that its full-year 2024 effective income tax rate will be in the range of 22% to 23%.

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-Q

Item 2. Management’s Discussion and Analysis