What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-02-13 compared with 2024-02-16 · 46 added, 53 removed, 198 unchanged (33% of the section changed)

1 unchanged sentence

Each of these risk factors could adversely affect, and in some cases may have already affected, the company’s business, operating results, cash flows and/or financial condition, as well as adversely affect the value of an investment in the company’s common stock.

In addition, other risks and uncertainties not currently known to the company, or which Snap-on currently believes are not material, may become material and also negatively impact the company’s business, operating results, cash flows, financial condition and/or reputation.

Business Risks

The sales of many of our products are dependent on the health of the vehicle repair market and the changing requirements of vehicle repair.

We believe sales of many of our products are dependent on the changing vehicle repair requirements, the number of vehicles on the road, the general aging of vehicles and the number of miles driven.

We believe sales of many of our products are dependent on the general aging of vehicles, increases in vehicle complexity, changes in vehicle technologies and the number of vehicles on the road.

These factors affect the frequency, type and amount of service and repair performed on vehicles by technicians, and therefore affect the demand for the number of technicians, the prosperity of technicians and, consequently, the demand technicians have for our tools, other products and services, as well as the value technicians place on those products and services.

1 unchanged sentence

A decrease in the use of privately-operated vehicles may lead to fewer repairs and less demand for our products.

In addition, the number of electric and hybrid vehicles developed and sold has risen in recent years, and is expected to continue to increase in the future.

While we believe that advances in vehicle technologies provide us with opportunities to develop innovative products and solutions for the vehicle repair market, if we are not able to effectively execute on those possibilities, our business and results of operations could suffer.

In addition, the development of emerging vehicle drivetrains and advanced driver assistance systems (ADAS) has increased in recent years, and further innovation is expected to continue in the future.

While we believe that changes in vehicle technologies provide us with opportunities to develop innovative products and solutions for the vehicle repair market, if we are not able to effectively execute on those possibilities, our business and results of operations could suffer.

The performance of Snap-on’s mobile tool distribution business depends on the success of its franchisees.

Approximately 41% of our consolidated net revenues in 2023 were generated by the Snap-on Tools Group, which consists of Snap-on’s business operations primarily serving vehicle service and repair technicians through the company’s multinational mobile tool distribution channel.

Approximately 39% of our consolidated net revenues (net sales plus financial services revenue) in 2024 were generated by the Snap-on Tools Group, which consists of Snap-on’s business operations primarily serving vehicle service and repair technicians through the company’s multinational mobile tool distribution channel.

Snap-on’s success is dependent on its relationships with franchisees, individually and collectively, as they are the primary sales and service link between the company and vehicle service and repair technicians, who are an important class of end users for Snap-on’s products and services.

7 unchanged sentences

The inability to continue to introduce new products that respond to customer needs and achieve market acceptance could result in lower revenues and reduced profitability.

Sales from new products represent a significant portion of our net sales and are expected to continue to represent a significant component of our future net sales.

The introduction of new products is an important element of our business.

We may not be able to compete effectively unless we continue to enhance existing products or introduce new products to the marketplace in a timely manner.

1 unchanged sentence

Our competitors’ new products may beat our products to market, be more effective, contain more features, be less expensive than our products, and/or render our products obsolete.

Any new products that we develop may not receive market acceptance or otherwise generate any meaningful net sales or profits for us relative to our expectations based on, among other factors, existing and anticipated investments in manufacturing capacity and commitments to fund advertising, marketing, promotional programs and research and development.

Any new products that we develop may not receive market acceptance or otherwise generate any meaningful net sales or profits for us relative to our expectations.

Failure to adequately protect intellectual property, or claims of infringement, could adversely affect our business, reputation, financial condition, results of operations and cash flows.

Intellectual property rights are an important and integral component of our business and failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business.

Intellectual property rights are an integral component of our business and failure to obtain or maintain adequate protection of these rights for any reason could have a material adverse effect on our business.

We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements.

8 unchanged sentences

Any inability to maintain customer satisfaction could diminish Snap-on’s premium image and reputation and could result in a lessening of our ability to command premium pricing.

In addition, technological developments and enhancements of products and service offerings in our industry may require our expanded use of artificial intelligence (“AI”) and machine learning;

In addition, technological developments and enhancements of products and service offerings in our industry may require our expanded use of artificial intelligence (“AI”);

if we are unable to keep pace with the rate of these and other developments, our ability to effectively compete could be adversely affected.

6 unchanged sentences

These include political, economic and social instability, such as acts of war, armed conflicts, civil disturbance or acts of terrorism, local labor conditions, and trade relations with China.

These also include changes in government policies and regulations, including those intended to address climate change, imposition or increases in withholding and other taxes on remittances and other payments by international subsidiaries, increases in trade sanctions and other related measures, as well as exposure to liabilities under anti-bribery and anti-corruption laws in various countries, such as the U.S.

These also include changes in government policies and regulations, including those intended to address climate change and other sustainability-related factors, imposition of, or increases in withholding and other taxes on remittances and other payments by international subsidiaries, increases in trade sanctions, tariffs and other related measures, as well as exposure to liabilities under anti-bribery and anti-corruption laws in various countries, such as the U.S.

Foreign Corrupt Practices Act.

Risks related to our non-U.S.

operations could further include currency volatility, transportation delays or interruptions, sovereign debt uncertainties and difficulties in enforcement of contract and intellectual property rights, as well as reputational risks related to, among other factors, different standards and practices among countries.

operations could further include currency volatility, supply chain inefficiencies, transportation delays or interruptions, sovereign debt uncertainties and difficulties in enforcement of contract and intellectual property rights, as well as reputational risks related to, among other factors, different standards and practices among countries.

Should the economic environment in our non-U.S.

1 unchanged sentence

SNAP-ON INCORPORATED

As part of the agreement related to the United Kingdom’s (“U.K.”) departure from the European Union (“Brexit”), there is a new series of customs and regulatory checks, including rules of origin and stringent local content requirements.

There are also restrictions on the free movement of people and temporary visas for work-related purposes have been re-introduced.

The implications of Brexit, including disruptions to trade and the movement of goods, services and people between the U.K.

and the European Union or other countries, may lead to additional cost, delays and volatility in currency exchange rates, as well as create legal and global economic uncertainty.

These and other potential implications could adversely affect our business and results of operations.

The February 2022 Russian invasion of Ukraine and the ongoing conflict in the region has led to sanctions and actions taken against Russia and Belarus by the United States, the U.K., the European Union and others.

The war in Ukraine has not had a material impact on our business and operations;

however, expansion of the conflict beyond its current geographic, political and economic scope could adversely impact our business, results of operations and financial condition.

The Russian invasion of Ukraine and the ongoing conflict in the region has led to sanctions and actions taken against Russia and Belarus by the United States, the United Kingdom, the European Union and others.

Expansion of the conflict or changes in governmental and/or third party responses or actions could adversely impact our business, results of operations and financial condition.

Risks related to this situation include supply chain inefficiencies, price increases and shortages of raw materials and components, increased trade sanctions, exchange rate volatility, energy shortages in Europe, an increase in cybersecurity incidents, and potential impairment of certain assets.

3 unchanged sentences

We manufacture a significant portion of the products we sell.

Any prolonged disruption in the operations of our existing manufacturing facilities, whether due to technical or labor difficulties, facility consolidation or closure actions, lack of raw material or component availability, destruction of or damage to any facility (as a result of natural disasters, climate or weather events, use and storage of hazardous materials, armed conflicts, sabotage, terrorism, civil unrest or other events), or other reasons, including outbreaks of infectious diseases, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Any prolonged disruption in the operations of our existing manufacturing facilities, whether due to technical or labor difficulties, facility expansion, consolidation or closure actions, lack of raw material or component availability, destruction of or damage to any facility (as a result of natural disasters, climate or weather events, use and storage of hazardous materials, armed conflicts, sabotage, terrorism, civil unrest, fire, flood or other events), or other reasons, including outbreaks of infectious diseases, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Price inflation and shortages of raw materials, components, certain purchased finished goods and energy sources have impacted, and in the future could adversely affect, the ability to obtain, as well as the cost of, needed materials or products and, in turn, our results of operations.

7 unchanged sentences

Raw materials, components and certain purchased finished goods can exhibit price and demand cyclicality, including as a result of tariffs, other trade protection measures, inflationary factors, and supply chain inefficiencies.

Associated unexpected variability has resulted, and in the future could result, in an increase in product costs and require Snap-on to increase prices to maintain margins.

Associated unexpected variability has resulted, and in the future could result, in an increase in product costs and require Snap-on to increase prices or reduce costs to maintain margins.

We use various energy sources to transport, produce and distribute products, and some of our products have components that are petroleum based.

1 unchanged sentence

future volatility and changes may be caused by market fluctuations, supply and demand, currency fluctuations, production and transportation disruptions, climate change regulations, world events, including armed conflicts, and governmental actions.

Energy price increases raise both our operating costs and the costs of our materials, and we may not be able to increase our prices enough to offset these costs in certain areas.

Energy price increases raise both our operating costs and the costs of our materials, and we may not be able to increase our prices enough to offset these costs.

Higher prices also may reduce the level of future customer orders and our profitability.

2023 ANNUAL REPORT 15

Failure to maintain effective distribution of products and services could adversely impact revenue, gross margin and profitability.

Failure to maintain effective distribution of products and services could adversely impact revenue and profitability.

We use a variety of distribution methods to sell our products and services.

Successfully managing the interaction of our distribution efforts to reach various potential customer segments for our products and services is a complex process.

Moreover, since each distribution method has distinct risks, costs and gross margins, our failure to implement the most advantageous balance in the delivery model for our products and services could adversely affect our revenue, gross margins and profitability.

Moreover, since each distribution method has distinct risks and costs, our failure to implement the most advantageous balance in the delivery model for our products and services could adversely affect our revenue and profitability.

2024 ANNUAL REPORT 15

Data security and information technology infrastructure and security are critical to supporting business objectives;

5 unchanged sentences

In response to the evolving cyber threat environment, we continue to invest in data security and address these risks and uncertainties by implementing security technologies, internal controls, network and data center resiliency, and redundancy and recovery processes, as well as by securing insurance.

Our efforts are intended to reduce the risk of, or moderate the consequences of, potential cyber threats and incidents.

Future problems that impair or compromise the company’s information technology infrastructure, or that of our third party service providers, including those due to natural disasters, power outages, major network failures, security breaches or malicious attacks, or those occurring during system upgrades and/or new system implementations could impede our operations.

Such impacts could interfere with our ability to record or process orders, manufacture and ship in a timely manner, manage our financial services operations including originating, processing, accounting for and collecting receivables, protect sensitive data of the company, our customers, our suppliers and business partners, or otherwise carry on business in the normal course.

In the first quarter of 2022, as previously disclosed, Snap-on detected unusual activity in some areas of its information technology environment, quickly took down its network connections as part of the company’s defense protocols, launched a comprehensive analysis assisted by a leading external forensics firm, and notified law enforcement.

The company continued to pursue its commercial activities and restored connections as system interfaces were cleared.

This incident did not have a significant impact on the results of our operations, and we are not currently aware of a security breach at any third-party service provider that we believe could significantly affect our operations.

As previously disclosed, in 2022, the company experienced and responded to a cyber incident that did not have a significant impact on the results of our operations.

Future cyber events, however, could cause us to lose customers and/or revenue and could require us to incur significant expense to remediate, including as a result of legal or regulatory claims, proceedings, fines or penalties, and could also damage our reputation.

In association with initiatives to better integrate business units, optimize our operating footprint and improve responsiveness to franchisees and customers, Snap-on is continually enhancing its global Enterprise Resource Planning (ERP) management information systems.

As we integrate, implement and deploy new information technology processes and enhance our information infrastructure across our global operations, we could experience disruptions that could have an adverse effect on our business, financial condition, results of operations and cash flows.

Failure to attract, retain and effectively manage qualified personnel could lead to a loss of revenue and/or profitability.

As we integrate, implement and deploy new information technology processes and enhance our information infrastructure across our global operations, we could experience disruptions that may have an adverse effect on our business, financial condition, results of operations and cash flows.

Failure to attract, develop, retain and effectively manage qualified personnel could lead to a loss of revenue and/or profitability.

Snap-on’s success depends, in part, on the efforts and abilities of its senior management team and other key employees whose skills, experience and industry contacts significantly benefit our operations and administration.

27 unchanged sentences

If circumstances surrounding our customers’ ability to repay their credit obligations were to deteriorate and result in the write-down or write-off of such receivables, it would negatively affect our operating results for the relevant period and, if large, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

2024 ANNUAL REPORT 17

The company maintains allowances for credit losses for receivables to provide for defaults and nonperformance.

2 unchanged sentences

The company’s allowances may not be adequate to cover actual losses, and future provisions for credit losses could materially and adversely affect our financial condition, results of operations and cash flows.

2023 ANNUAL REPORT 17

Foreign operations are subject to currency exchange, inflation, interest and other risks that could adversely affect our business, financial condition, results of operations and cash flows.

11 unchanged sentences

Further, economic conditions in the markets in which we operate can vary, including due to changes in currency exchange rates, local inflation, interest rates and other factors, which could adversely affect our business, financial condition, results of operations and cash flows.

Adverse developments in the credit and financial markets could negatively impact the availability of credit that we and our customers need to operate our businesses.

We depend upon the availability of credit to operate our business, including the financing of receivables from end-user customers that are originated by our financial services businesses.

Our end-user customers, franchisees and suppliers also require access to credit for their businesses.

At times, world financial markets have been unstable and subject to uncertainty.

Adverse developments in the credit and financial markets, or unfavorable changes in Snap-on’s credit rating, could negatively impact the availability of future financing and the terms on which it might be available to Snap-on, its end-user customers, franchisees and suppliers.

Inability to access credit or capital markets, or a deterioration in the terms on which financing might be available, could have an adverse impact on our business, financial condition, results of operations and cash flows.

Increasing our financial leverage could affect our operations and profitability.

Our $900 million multicurrency revolving 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.

While there are no current borrowings under the credit facility, future borrowings and the resulting increase in the company’s leverage ratio may affect both our availability of additional capital resources as well as our operations in several ways, including:

• The terms on which credit may be available to us could be less attractive, both in the economic terms of the credit and the covenants stipulated by the credit terms;

• The possible lack of availability of additional credit or access to the commercial paper market;

• The potential for higher levels of interest expense to service or maintain our outstanding debt;

• The possibility of additional borrowings in the future to repay our indebtedness when it comes due;

• The possible diversion of capital resources from other uses.

While we believe we will have the ability to service our debt and obtain additional financial resources in the future if and when needed, that will depend upon our results of operations and financial position at the time, the then-current state of the credit and financial markets, and other factors that may be beyond our control.

Therefore, we cannot give assurances that credit will be available on terms that we consider attractive, or at all, if and when necessary or beneficial to us.

Failure to achieve expected investment returns on pension plan assets, as well as changes in interest rates or plan demographics, could adversely impact our results of operations, financial condition and cash flows.

7 unchanged sentences

Changes in plan demographics, including an increase in the number of retirements or changes in life expectancy assumptions, may also increase the costs and funding requirements of the obligations related to the company’s pension plans.

SNAP-ON INCORPORATED

Our pension plan obligations are affected by changes in market interest rates.

16 unchanged sentences

See Note 11 to the Consolidated Financial Statements for additional information on the company’s pension plans.

SNAP-ON INCORPORATED

The recognition of impairment charges on goodwill or other intangible assets could adversely impact our future financial condition and results of operations.

We have a substantial amount of goodwill and purchased intangible assets, almost all of which are booked in the Commercial & Industrial Group and in the Repair Systems & Information Group.

We are required to perform impairment tests on our goodwill and other intangible assets annually or at any time when events occur that could impact the value of our business segments.

We are required to perform impairment tests on our goodwill and other intangible assets annually or at any time when events occur that could impact the value of our operating segments.

Our determination of whether impairment has occurred is based on a comparison of each of our reporting units’ fair market value with its carrying value.

1 unchanged sentence

Should the economic environment in these markets deteriorate, our results of operations and financial position could be materially impacted, including as a result of the effects of potential impairment write-downs of goodwill and/or other intangible assets related to these businesses.

Adverse developments in the credit and financial markets could negatively impact the availability of credit that we and our customers need to operate our businesses.

From time to time we depend upon the availability of credit to operate our business, including the financing of receivables from end-user customers that are originated by our financial services businesses.