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Item 7. Management’s Discussion and Analysis

2025-02-13 compared with 2024-02-16 · 146 added, 158 removed, 560 unchanged (35% of the section changed)

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Management Overview

We believe our 2023 operating performance demonstrates the continuing momentum of our business, confirms the special resilience of our markets, and reflects the considerable capability of our combined operations and our experienced team to overcome the uncertainties of the current environment.

Throughout the variability, we maintained and further extended our ongoing advantages in our products, in our brands and in our people.

We believe our 2024 operating performance demonstrates the possibilities for growth across our businesses, confirms the special resilience of our markets, and reflects the considerable capability of our combined operations and our experienced team to prevail in the difficulties of the current macroeconomic environment.

Throughout the uncertainty, we maintained and further extended our ongoing advantages in our products, in our brands and in our people.

At the same time, we leveraged existing proficiencies to focus on expanding our professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including critical industries, where the cost and penalties for failure can be high.

Snap-on’s value proposition of making work easier for serious professionals is an ongoing strength as we move forward along our runways for coherent growth:

• Enhancing the franchise network, where we continued to focus on helping our franchisees extend their reach through innovative selling processes and productivity initiatives that break the traditional time and space barriers inherent in a mobile van;

Snap‑on’s value proposition of making work easier for serious professionals is an ongoing strength as we proceed along our strategic runways for coherent growth:

• Enhancing the franchise network, where we continued to focus on helping our franchisees increase their reach through innovative selling processes and productivity initiatives that break the traditional time and space barriers inherent in a mobile van;

• Expanding with repair shop owners and managers, where we continued to make progress in connecting with customers and translating the resulting insights into innovation that solves specific challenges in the repair facility;

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• Building in emerging markets, where we continued to maintain manufacturing capacity, as well as refine product lines and distribution capabilities.

Our strategic priorities and plans for 2024 involve continuing to build on our Snap-on Value Creation Processes – our suite of strategic principles and processes we employ every day designed to create value, and employed in the areas of safety, quality, customer connection, innovation and Rapid Continuous Improvement (“RCI”).

Our strategic priorities and plans for 2025 also involve continuing to build on our Snap-on Value Creation Processes – our suite of strategic principles and processes we employ every day designed to create value, and employed in the areas of safety, quality, customer connection, innovation and Rapid Continuous Improvement (“RCI”).

We expect to continue to deploy these processes in our existing operations as well as into our recently acquired businesses.

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(“SAVTEQ”) for a cash purchase price of $3.0 million.

SAVTEQ, based in Lexington, Kentucky, provides precise non-contact measuring capabilities that Snap-on intends to leverage in its product offerings.

SAVTEQ, based in Lexington, Kentucky, provides precise non-contact measuring capabilities that Snap-on is leveraging in its product offerings.

On November 1, 2023, Snap-on acquired Mountz, Inc.

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Mountz, based in San Jose, California, is a leading developer, manufacturer and marketer of high-precision torque tools, including measurement, calibration and documentation products.

The acquisition of Mountz complements and expands Snap-on’s torque offerings to customers in a variety of critical industries including aerospace, transportation and advanced manufacturing.

The acquisition of Mountz has complemented and expanded Snap-on’s torque offerings to customers in a variety of critical industries including aerospace, transportation and advanced manufacturing.

For segment reporting purposes, the results o f operations and assets of SAVTEQ have been included in the Repair Systems & Information Group and those of Mountz have been included in the Commercial & Industrial Group since the respective acquisition dates.

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references to “fiscal 2023” or “2023” refer to the fiscal year ended December 30, 2023;

and references to “fiscal 2021” or “2021” refer to the fiscal year ended January 1, 2022.

References in this document to 2023, 2022 and 2021 year end refer to December 30, 2023, December 31, 2022, and January 1, 2022, respectively.

and references to “fiscal 2022” or “2022” refer to the fiscal year ended December 31, 2022.

References in this document to 2024, 2023 and 2022 year end refer to December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

Snap-on’s 2024, 2023 and 2022 fiscal years each contained 52 weeks of operating results.

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Non-GAAP Measures

References in this 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.

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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Summary of Consolidated Performance

Consolidated net sales of $4,730.2 million in 2023 represented an increase of $237.4 million, or 5.3%, from 2022 levels, reflecting a $250.7 million, or 5.6%, organic gain and $5.5 million of acquisition-related sales, partially offset by $18.8 million of unfavorable foreign currency translation.

Operating earnings before financial services of $1,039.9 million in 2023 compared to $941.2 million in 2022, an increase of $98.7 million or 10.5%.

Consolidated net sales of $4,707.4 million in 2024 represented a decrease of $22.8 million, or 0.5%, from 2023 levels, reflecting a $40.6 million, or 0.9%, organic decline and $5.5 million of unfavorable foreign currency translation, partially offset by $23.3 million of acquisition-related sales.

Operating earnings before financial services of $1,068.8 million in 2024, including a $22.5 million benefit for the final payments associated with a legal matter, which were received in the first six months of 2024 (the “legal payments”), compared to $1,039.9 million in 2023.

As a percentage of net sales, operating earnings before financial services were 22.7% compared to 22.0% last year.

Operating earnings of $1,310.4 million in 2023 compared to $1,207.2 million in 2022, an increase of $103.2 million or 8.5%.

Operating earnings of $1,345.7 million in 2024, including a $22.5 million benefit from the legal payments, compared to $1,310.4 million in 2023.

As a percentage of revenues (net sales plus financial services revenue), operating earnings were 26.3% compared to 25.7% last year.

Net earnings attributable to Snap-on of $1,011.1 million, or $18.76 per diluted share, in 2023 compared to $911.7 million, or $16.82 per diluted share, in 2022, an increase of $99.4 million or $1.94 per diluted share.

Net earnings attributable to Snap-on of $1,043.9 million, or $19.51 per diluted share, in 2024, including a $17.5 million, or $0.32 per diluted share, after-tax benefit from the legal payments, compared to $1,011.1 million, or $18.76 per diluted share, in 2023, an increase of $32.8 million or $0.75 per diluted share.

2024 ANNUAL REPORT 29

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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.

Segment net sales of $1,458.3 million in 2023 represented an increase of $59.1 million, or 4.2%, from 2022 levels, reflecting a $69.7 million, or 5.0%, organic gain and $5.5 million of acquisition-related sales, partially offset by $16.1 million of unfavorable currency translation.

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

Operating earnings of $226.1 million in 2023, including $9.0 million of unfavorable foreign currency effects, compared to $197.6 million in 2022, an increase of $28.5 million or 14.4%.

Segment net sales of $1,476.8 million in 2024 represented an increase of $18.5 million, or 1.3%, from 2023 levels, reflecting a $1.5 million, or 0.1%, organic gain and $23.3 million of acquisition-related sales, partially offset by $6.3 million of unfavorable foreign currency translation.

The organic increase primarily reflects a mid single-digit gain in sales to customers in critical industries, partially offset by a double-digit reduction in the power tools operation and a low single-digit decline in the European-based hand tools business.

Segment operating earnings of $242.1 million in 2024 compared to $226.1 million in 2023, an increase of $16.0 million or 7.1%.

The Commercial & Industrial Group intends to focus on the following strategic priorities in 2025:

• Expanding our business with existing customers and reaching new customers in critical industries and other market segments;

• Continuing to invest in emerging market growth initiatives;

• Leveraging our investments in emerging markets to support growth initiatives;

• Broadening our product offering designed particularly for critical industry segments;

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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.

Segment net sales of $2,088.8 million in 2023 represented an increase of $16.8 million, or 0.8%, from 2022 levels, reflecting a $25.0 million, or 1.2%, organic sales gain, partially offset by $8.2 million of unfavorable foreign currency translation.

The organic increase is primarily due to a mid single-digit gain in the segment’s international operations, while activity in the U.S.

operations was essentially flat.

Operating earnings of $493.8 million in 2023, including $12.5 million of unfavorable foreign currency effects, compared to $458.7 million in 2022, an increase of $35.1 million or 7.7%.

Segment net sales of $1,989.2 million in 2024 represented a decrease of $99.6 million, or 4.8%, from 2023 levels, reflecting a $100.9 million, or 4.8%, organic sales decline, partially offset by $1.3 million of favorable foreign currency translation.

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

Segment o perating earnings of $447.3 million in 2024 compared to $493.8 million in 2023, a decrease of $46.5 million or 9.4%.

The Snap-on Tools Group intends to focus on the following strategic priorities in 2025:

• Enhancing franchisee sales productivity, profitability, commercial health, and satisfaction;

• Developing new programs and products to expand market coverage, reaching new technician customers and increasing penetration with existing customers;

• Increasing investment in new product innovation and development;

• Developing new programs and products to match current technician preferences, reaching new customers and increasing penetration with existing customers;

• Expanding investment in new product innovation and development;

• Improving customer service levels and productivity in back office support functions, manufacturing and the supply chain through RCI initiatives and capacity investment.

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

Segment net sales of $1,781.2 million in 2023 represented an increase of $114.3 million, or 6.9%, from 2022 levels, reflecting a $111.7 million, or 6.7%, organic sales increase and $2.6 million of favorable foreign currency translation.

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

Operating earnings of $433.2 million in 2023, including $1.3 million of favorable foreign currency effects, compared to $393.3 million in 2022, an increase of $39.9 million or 10.1%.

Segment net sales of $1,797.9 million in 2024 represented an increase of $16.7 million, or 0.9%, from 2023 levels, reflecting an $18.1 million, or 1.0%, organic sales gain, partially offset by $1.4 million of unfavorable foreign currency translation.

The organic improvement primarily reflects a mid single-digit increase in activity with OEM dealerships, partially offset by a low single-digit decline in sales of undercar equipment.

Segment o perating earnings of $455.2 million in 2024 compared to $433.2 million in 2023, an increase of $22.0 million or 5.1%.

The Repair Systems & Information Group intends to focus on the following strategic priorities in 2025:

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• Continuing software and hardware upgrades to further improve functionality, performance and efficiency;

• Leveraging integration of software solutions;

• Continuing productivity advancements through RCI initiatives and leveraging of resources;

• Further building our proprietary databases to enhance software solutions;

• Advancing productivity through RCI initiatives and the optimization of resources;

• Increasing geographic penetration, including in emerging markets.

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Financial services revenue of $401.0 million in 2024 compared to $378.1 million in 2023.

Originations of $1,235.5 million in 2023 represented an increase of $82.4 million, or 7.1%, from 2022 levels.

Originations of $1,182.9 million in 2024 represented a decrease of $52.6 million, or 4.3%, from 2023 levels.

Operating earnings from financial services of $276.9 million in 2024 compared to $270.5 million last year.

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Net cash provided by operating activities of $1,217.5 million in 2024 compared to $1,154.2 million in 2023.

The $479.0 million increase is primarily due to a $352.9 million change in net operating assets and liabilities, and a $100.7 million increase in net earnings.

Net cash used by investing activities of $331.8 million in 2023 included additions to finance receivables of $1,029.0 million, which were partially offset by collections of $833.5 million, as well as a use of cash of $42.6 million for the acquisitions of Mountz and SAVTEQ.

Net cash used by investing activities of $206.2 million in 2022 included additions to finance receivables of $955.8 million, partially offset by collections of $826.9 million, as well as $0.5 million of cash provided by acquisitions.

The $63.3 million increase is primarily due to a $34.3 million increase in net earnings and a $18.0 million change in net operating assets and liabilities.

Net cash used by investing activities of $204.1 million in 2024 included additions to finance receivables of $966.0 million, which were partially offset by collections of $837.8 million.

Net cash used by investing activities of $331.8 million in 2023 included additions to finance receivables of $1,029.0 million, partially offset by collections of $833.5 million, as well as $42.6 million of cash used for acquisitions.

Capital expenditures in 2024 and 2023 totaled $83.5 million and $95.0 million, respectively.

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Net cash used by financing activities of $649.8 million in 2024 included $406.4 million for dividend payments to shareholders, $290.0 million for the repurchase of 952,000 shares of Snap-on’s common stock, and net repayments of other short-term borrowings of $1.3 million.

These amounts were partially offset by $113.6 million of proceeds from stock purchase plan and stock option exercises.

Net cash used by financing activities of $485.0 million in 2022 included $313.1 million for dividend payments to shareholders and $198.1 million for the repurchase of 899,000 shares of Snap-on’s common stock.

These amounts were partially offset by $55.0 million of proceeds from stock purchase plan and stock option exercises and net proceeds from other short-term borrowings of $1.6 million.

These amounts were partially offset by $92.3 million of proceeds from stock purchase plans and stock option exercises.

Net cash used by financing activities of $572.9 million in 2023 included $355.6 million for dividend payments to shareholders, $294.7 million for the repurchase of 1,126,000 shares of Snap-on’s common stock, and net repayments of other short-term borrowings of $1.7 million.

These amounts were partially offset by $113.6 million of proceeds from stock purchase plans and stock option exercises.

2024 ANNUAL REPORT 31

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Other income (expense) – net 77.0 1.5 % 67.5 1.3 % 9.5 14.1 %

Earnings before income taxes and equity earnings

Earnings before income taxes

1,373.1 26.9 % 1,328.0 26.0 % 45.1 3.4 %

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

Net sales of $4,730.2 million in 2023 represented an increase of $237.4 million, or 5.3%, from 2022 levels, reflecting a $250.7 million, or 5.6%, organic gain and $5.5 million of acquisition-related sales, partially offset by $18.8 million of unfavorable foreign currency translation.

Net sales of $4,707.4 million in 2024 represented a decrease of $22.8 million, or 0.5%, from 2023 levels, reflecting a $40.6 million, or 0.9%, organic decline and $5.5 million of unfavorable foreign currency translation, partially offset by $23.3 million of acquisition-related sales.

Gross profit of $2,377.9 million in 2024 compared to $2,349.1 million last year, an increase of $28.8 million or 1.2%.

Gross margin (gross profit as a percentage of net sales) improved 120 basis points (100 basis points (“bps”) equals 1.0 percent) from 2022 primarily due to increased sales volumes and pricing actions, lower material and other costs, and benefits from the company’s RCI initiatives.

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

Operating expenses of $1,309.2 million in 2023 compared to $1,239.9 million last year .

Operating expenses as a percentage of net sales rose 10 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 $1,039.9 million in 2023 compared to $941.2 million in 2022, an increase of $98.7 million or 10.5%.

Gross margin (gross profit as a percentage of net sales) improved 80 basis points (100 basis points (“bps”) equals 1.0 percent) from 2023 primarily due to benefits from the company’s RCI initiatives, increased sales in higher-gross-margin businesses, and lower material and other costs.

Operating expenses of $1,309.1 million in 2024, including a $22.5 million benefit from the legal payments, compared to $1,309.2 million last year .

Operating expenses as a percentage of net sales rose 10 bps from last year primarily reflecting the effects of lower sales volumes, partially offset by benefits from the legal payments.

Operating earnings before financial services of $1,068.8 million in 2024, including a $22.5 million benefit from the legal payments, compared to $1,039.9 million in 2023.

As a percentage of net sales, operating earnings before financial services were 22.7% compared to 22.0% last year.

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Financial services operating earnings of $276.9 million in 2024 compared to $270.5 million in 2023 .

Operating earnings of $1,310.4 million in 2023 compared to $1,207.2 million in 2022 , an increase of $103.2 million or 8.5%.

Operating earnings of $1,345.7 million in 2024, including a $22.5 million benefit from the legal payments, compared to $1,310.4 million in 2023.

As a percentage of revenues, operating earnings were 26.3% compared to 25.7% last year.

Interest expense in 2023 increased $2.8 million compared to last year.

Interest expense in 2024 decreased $0.3 million compared to last year.

See Note 9 to the Consolidated Financial Statements for additional information on debt and credit facilities.

SNAP-ON INCORPORATED

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.

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 17 to the Consolidated Financial Statements for additional information on Other income (expense) – net.

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See Note 8 to the Consolidated Financial Statements for additional information on income taxes.

Segment Results

Snap-on’s business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance.

Snap-on’s reportable business segments are:

Snap-on’s operating segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance.

Snap-on’s reportable operating segments are:

(i) the Commercial & Industrial Group;

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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 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 evaluates the performance of the Commercial & Industrial Group, the Snap-on Tools Group and the Repair Systems & Information Group operating segments based on segment net sales and segment operating earnings.

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

The Financial Services operating segment is evaluated based on financial services revenue and segment operating earnings.

Corporate expenses primarily reflect stock-based compensation and other costs not attributable to an operating segment.

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

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Segment net sales 1,476.8 100.0 % 1,458.3 100.0 % 18.5 1.3 %

Cost of goods sold (887.5) (60.9) % (880.5) (62.9) % (7.0) (0.8) %

Gross profit 570.8 39.1 % 518.7 37.1 % 52.1 10.0 %

Operating expenses (344.7) (23.6) % (321.1) (23.0) % (23.6) (7.3) %

Segment cost of goods sold (868.6) (58.8) % (887.5) (60.9) % 18.9 2.1 %

Segment gross profit 608.2 41.2 % 570.8 39.1 % 37.4 6.6 %

Segment operating expenses (366.1) (24.8) % (344.7) (23.6) % (21.4) (6.2) %

Segment operating earnings $ 242.1 16.4 % $ 226.1 15.5 % $ 16.0 7.1 %

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

Segment gross margin in 2023 improved 200 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 40 bps of unfavorable foreign currency effects.

Segment operating expenses as a percentage of net sales in 2023 rose 60 bps as compared to 2022 primarily reflecting increased sales in higher-expense businesses, as well as increased personnel and other costs.

As a result of these factors, segment operating earnings of $226.1 million in 2023, including $9.0 million of unfavorable foreign currency effects, compared to $197.6 million in 2022, an increase of $28.5 million or 14.4%.

Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.5% in 2023 compared to 14.1% last year.

The organic increase is primarily due to a mid single-digit gain in sales to customers in critical industries, partially offset by a double-digit reduction in the power tools operation and a low single-digit decline in the European-based hand tools business.

Segment gross margin in 2024 improved 210 bps from last year, primarily reflecting increased sales volumes in higher-gross-margin critical industry sectors, savings from the segment’s RCI initiatives, lower material and other costs, and 40 bps of benefits from acquisitions.

Segment operating expenses as a percentage of net sales in 2024 rose 120 bps as compared to 2023 primarily due to increased personnel and other costs, and a 50 bps impact from acquisitions.

2024 ANNUAL REPORT 33

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

As a result of these factors, segment operating earnings of $242.1 million in 2024 compared to $226.1 million in 2023, an increase of $16.0 million or 7.1%.

Segment operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 16.4% in 2024 compared to 15.5% last year.

Snap-on Tools Group

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Segment net sales $ 1,989.2 100.0 % $ 2,088.8 100.0 % $ (99.6) (4.8) %

Cost of goods sold (1,107.7) (53.0) % (1,141.7) (55.1) % 34.0 3.0 %

Gross profit 981.1 47.0 % 930.3 44.9 % 50.8 5.5 %

Operating expenses (487.3) (23.4) % (471.6) (22.8) % (15.7) (3.3) %

Segment cost of goods sold (1,050.3) (52.8) % (1,107.7) (53.0) % 57.4 5.2 %

Segment gross profit 938.9 47.2 % 981.1 47.0 % (42.2) (4.3) %

Segment operating expenses (491.6) (24.7) % (487.3) (23.4) % (4.3) (0.9) %

Segment operating earnings $ 447.3 22.5 % $ 493.8 23.6 % $ (46.5) (9.4) %

The organic increase is primarily due to a mid single-digit gain in the segment’s international operations, while activity in the U.S.

operations was essentially flat.

Segment gross margin in 2023 improved 210 bps from last year, primarily reflecting increased sales of higher-gross-margin products, benefits from sales volumes and pricing actions, and lower material and other costs.

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

Segment operating expenses as a percentage of net sales in 2023 rose 60 bps from last year primarily due to increased personnel and other costs.

As a result of these factors, segment operating earnings of $493.8 million in 2023, including $12.5 million of unfavorable foreign currency effects, compared to $458.7 million in 2022, an increase of $35.1 million or 7.7%.

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

Segment gross margin in 2024 improved 20 bps from last year primarily reflecting decreased sales of lower-gross-margin products.

Segment operating expenses as a percentage of net sales in 2024 rose 130 bps from last year primarily due to the lower sales volumes.

As a result of these factors, segment operating earnings of $447.3 million in 2024 compared to $493.8 million in 2023, a decrease of $46.5 million or 9.4%.

Operating margin for the Snap‑on Tools Group of 22.5% in 2024 compared to 23.6% last year.

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Segment net sales 1,797.9 100.0 % 1,781.2 100.0 % 16.7 0.9 %

Cost of goods sold (984.0) (55.2) % (934.8) (56.1) % (49.2) (5.3) %

Gross profit 797.2 44.8 % 732.1 43.9 % 65.1 8.9 %

Operating expenses (364.0) (20.5) % (338.8) (20.3) % (25.2) (7.4) %

Segment cost of goods sold (967.1) (53.8) % (984.0) (55.2) % 16.9 1.7 %

Segment gross profit 830.8 46.2 % 797.2 44.8 % 33.6 4.2 %

Segment operating expenses (375.6) (20.9) % (364.0) (20.5) % (11.6) (3.2) %

Segment operating earnings $ 455.2 25.3 % $ 433.2 24.3 % $ 22.0 5.1 %

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

Segment gross margin in 2023 improved 90 bps from last year primarily due to lower material and other costs, increased sales volumes and pricing actions, and savings from RCI initiatives.

Segment operating expenses as a percentage of net sales in 2023 rose 20 bps from 2022 , primarily reflecting increased personnel and other costs, partially offset by benefits from sales volume leverage.

As a result of these factors, segment operating earnings of $433.2 million in 2023, including $1.3 million of favorable foreign currency effects, compared to $393.3 million in 2022, an increase of $39.9 million or 10.1%.

The organic improvement primarily reflects a mid single-digit increase in activity with OEM dealerships, partially offset by a low single-digit decline in sales of undercar equipment.

Segment gross margin in 2024 improved 140 bps from last year primarily due to increased sales of higher-gross-margin products and savings from the segment’s RCI initiatives.

Segment operating expenses as a percentage of net sales in 2024 rose 40 bps from 2023 primarily reflecting increased personnel and other costs.

As a result of these factors, segment operating earnings of $455.2 million in 2024 compared to $433.2 million in 2023, an increase of $22.0 million or 5.1%.

Operating margin for the Repair Systems & Information Group of 25.3% in 2024 compared to 24.3% last year.

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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 $378.1 million in 2023 increased $28.4 million, or 8.1%, from 2022 .

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

Financial services revenue of $401.0 million in 2024 represented an increase of $22.9 million, or 6.1%, from 2023 .

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

In 2024 and 2023 , the average yields on contract receivables were 9.0% and 8.8% , respectively.

Originations of $1,235.5 million in 2023 represented an increase of $82.4 million, or 7.1%, from 2022 levels.

Originations of $1,182.9 million in 2024 represented a decrease of $52.6 million, or 4.3%, from 2023 levels.

Financial services expenses primarily include personnel-related and other general and administrative costs, as well as provisions for credit losses.

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

The increase in provisions reflects both the growth of the portfolio, as well as a return to more typical pre-pandemic rates of provision.

As a percentage of the average financial services portfolio, financial services expenses were 5.0% in 2024 and 4.5% in 2023.

As a result of these factors, segment operating earnings in 2023, including $0.6 million of unfavorable foreign currency effects, increased $4.5 million, or 1.7%, from 2022 levels.

As a result of these factors, segment operating earnings of $276.9 million in 2024 compared to $270.5 million in 2023 , an increase of $6.4 million, or 2.4%.

See Note 1 and Note 4 to the Consolidated Financial Statements for additional information on financial services.

S nap-on’s general corporate expenses in 2024 of $75.8 million compared to $113.2 million recorded in 2023 .

The year-over-year increase primarily reflects higher stock-based and performance-based compensation expense.

The year-over-year decrease primarily reflects benefits from the legal payments received in the first six months of 2024 and lower stock-based compensation costs.

Quarterly Data

2024 ANNUAL REPORT 35

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Quarterly Data

(Amounts in millions, except per share data) First

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

Net sales of $1,196.6 million in the fourth quarter of 2023 represented an increase of $40.7 million, or 3.5%, from 2022 levels, reflecting a $26.1 million, or 2.2%, organic gain, $5.5 million of acquisition-related sales, and $9.1 million of favorable foreign currency translation.

Net sales of $1,198.7 million in the fourth quarter of 2024 represented an increase of $2.1 million, or 0.2%, from 2023 levels, reflecting a $2.0 million, or 0.2%, organic gain and $2.1 million of acquisition-related sales, partially offset by $2.0 million of unfavorable foreign currency translation.

Gross profit of $596.1 million in the fourth quarter of 2024 compared to $577.6 million last year, an increase of $18.5 million or 3.2% .

Gross margin in the quarter declined 20 bps from the fourth quarter of 2022 primarily due to 20 bps of unfavorable foreign currency effects.

Benefits from lower material and other costs, and savings from the company’s RCI initiatives, were offset by increased sales in lower-gross-margin businesses.

Gross margin in the quarter improved 140 bps from the fourth quarter of 2023 primarily due to increased sales in higher-gross-margin businesses and benefits from the company’s RCI initiatives.

Operating expenses of $330.9 million in the fourth quarter of 2024 compared to $319.7 million in 2023.

Operating expenses as a percentage of net sales improved 30 bps from last year, primarily reflecting lower corporate expenses and benefits from higher sales volumes, partially offset by increased personnel and other costs.

Operating expenses as a percentage of net sales rose 90 bps from last year primarily reflecting increased corporate and other operating costs.

Operating earnings before financial services of $265.2 million in the fourth quarter of 2024 compared to $257.9 million in 2023, an increase of $7.3 million or 2.8%.

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Financial services operating earnings of $66.7 million in the period compared to $67.9 million in 2023 .

Operating earnings of $325.8 million in the fourth quarter of 2023 compared to $311.9 million in 2022, an increase of $13.9 million or 4.5%.

Operating earnings of $331.9 million in the fourth quarter of 2024 compared to $325.8 million in 2023.

As a percentage of revenues, operating earnings were 25.5% in the quarter compared to 25.2% last year.

Interest expense in the fourth quarter of 2023 increased $0.5 million compared to last year .

Interest expense in the fourth quarter of 2024 decreased $0.2 million from last year .

See Note 9 to the Consolidated Financial Statements for additional information on debt and credit facilities.

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

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 17 to the Consolidated Financial Statements for additional information on Other income (expense) – net.

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See Note 8 to the Consolidated Financial Statements for additional information on income taxes.

Net earnings attributable to Snap-on of $255.3 million, or $4.75 per diluted share, in the fourth quarter of 2023 compared to $238.9 million, or $4.42 per diluted share, in 2022, an increase of $16.4 million or $0.33 per diluted share.

Net earnings attributable to Snap-on of $258.1 million, or $4.82 per diluted share, in the fourth quarter of 2024 compared to $255.3 million, or $4.75 per diluted share, in the fourth quarter of 2023.

Segment Results

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Segment net sales 379.2 100.0 % 363.9 100.0 % 15.3 4.2 %

Cost of goods sold (221.3) (60.8) % (213.8) (62.3) % (7.5) (3.5) %

Gross profit 142.6 39.2 % 129.4 37.7 % 13.2 10.2 %

Operating expenses (88.5) (24.3) % (81.5) (23.7) % (7.0) (8.6) %

Segment cost of goods sold (223.8) (59.0) % (221.3) (60.8) % (2.5) (1.1) %

Segment gross profit 155.4 41.0 % 142.6 39.2 % 12.8 9.0 %

Segment operating expenses (91.9) (24.3) % (88.5) (24.3) % (3.4) (3.8) %

Segment operating earnings $ 63.5 16.7 % $ 54.1 14.9 % $ 9.4 17.4 %

Segment net sales of $363.9 million in the fourth quarter of 2023 represented an increase of $20.7 million, or 6.0%, fro m 2022 levels, reflecting an $11.6 million, or 3.3%, organic gain, $5.5 million of acquisition-related sales, and $3.6 million of favorable 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 sales of power tools.

Segment gross margin in the fourth quarter improved 150 bps from last year, primarily reflecting increased sales volumes in the higher-gross-margin critical industry sector, pricing actions, savings from the segment’s RCI initiatives, and 30 bps of benefits from acquisitions.

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

Segment operating expenses as a percentage of net sales in the fourth quarter rose 60 bps as compared to 2022 primarily due to a 30 bps impact from acquisitions and increased personnel and other costs.

As a result of these factors, segment operating earnings of $54.1 million in the fourth quarter of 2023, including $1.4 million of unfavorable foreign currency effects, compared to $47.9 million in 2022 , an increase of $6.2 million or 12.9%.

Segment net sales of $379.2 million in the fourth quarter of 2024 represented an increase of $15.3 million, or 4.2%, fro m 2023 levels, reflecting a $14.2 million, or 3.9%, organic gain and $2.1 million of acquisition-related sales, partially offset by $1.0 million of unfavorable foreign currency translation.

The organic increase is primarily due to a gain in sales to customers in critical industries, including a high single-digit increase in specialty torque.

Segment gross margin in the fourth quarter improved 180 bps from 2023, primarily reflecting increased sales volumes in the higher-gross-margin critical industry sectors and savings from the segment’s RCI initiatives.

Segment operating expenses as a percentage of net sales in the fourth quarter of 2024 was unchanged from last year.

As a result of these factors, segment operating earnings of $63.5 million in the fourth quarter of 2024 compared to $54.1 million in 2023 , an increase of $9.4 million or 17.4% .

Operating margin for the Commercial & Industrial Group of 16.7% in the quarter compared to 14.9% last year.

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Segment net sales $ 506.6 100.0 % $ 513.3 100.0 % $ (6.7) (1.3) %

Cost of goods sold (281.2) (54.8) % (308.3) (56.8) % 27.1 8.8 %

Gross profit 232.1 45.2 % 234.4 43.2 % (2.3) (1.0) %

Operating expenses (121.1) (23.6) % (118.3) (21.8) % (2.8) (2.4) %

Segment cost of goods sold (280.5) (55.4) % (281.2) (54.8) % 0.7 0.2 %

Segment gross profit 226.1 44.6 % 232.1 45.2 % (6.0) (2.6) %

Segment operating expenses (119.2) (23.5) % (121.1) (23.6) % 1.9 1.6 %

Segment operating earnings $ 106.9 21.1 % $ 111.0 21.6 % $ (4.1) (3.7) %

Segment net sales of $506.6 million in the fourth quarter of 2024 represented a decrease of $6.7 million, or 1.3%, from 2023 levels, reflecting a $7.3 million, or 1.4%, 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.

operations, partially offset by a mid single-digit gain in the segment’s international operations.

Segment gross margin in the fourth quarter improved 200 bps from last year, primarily reflecting decreased sales of lower-gross-margin products.

Segment operating expenses as a percentage of net sales in the fourth quarter rose 180 bps as compared to 2022 primarily due to the lower sales volumes.

SNAP-ON INCORPORATED

As a result of these factors, segment operating earnings of $111.0 million in the fourth quarter of 2023, including $0.1 million of unfavorable foreign currency effects, compared to $116.1 million in 2022 , a decrease of $5.1 million, or 4.4%.

The organic decrease is due to a low 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 fourth quarter declined 60 bps from last year primarily due to the decreased volumes and the effects of increased sales of lower-gross-margin products.

Segment operating expenses as a percentage of net sales in the fourth quarter improved 10 bps from 2023.

As a result of these factors, segment operating earnings of $106.9 million in the fourth quarter of 2024 compared to $111.0 million in 2023 , a decrease of $4.1 million, or 3.7%.

Operating margin for the Snap‑on Tools Group of 21.1% in the quarter compared to 21.6% last year.

SNAP-ON INCORPORATED

Repair Systems & Information Group

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Segment net sales 456.6 100.0 % 450.8 100.0 % 5.8 1.3 %

Cost of goods sold (247.9) (55.0) % (241.0) (55.0) % (6.9) (2.9) %

Gross profit 202.9 45.0 % 196.9 45.0 % 6.0 3.0 %

Operating expenses (89.6) (19.9) % (86.3) (19.7) % (3.3) (3.8) %

Segment cost of goods sold (242.0) (53.0) % (247.9) (55.0) % 5.9 2.4 %

Segment gross profit 214.6 47.0 % 202.9 45.0 % 11.7 5.8 %

Segment operating expenses (93.2) (20.4) % (89.6) (19.9) % (3.6) (4.0) %

Segment operating earnings $ 121.4 26.6 % $ 113.3 25.1 % $ 8.1 7.1 %

Segment net sales of $450.8 million in the fourth quarter of 2023 represented an increase of $12.9 million, or 2.9%, from 2022 levels, reflecting an $8.8 million, or 2.0%, organic sales increase and $4.1 million of favorable foreign currency translation.

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

Segment gross margin in the fourth quarter was unchanged from last year with benefits from lower material and other costs and savings from RCI initiatives, offset by increased sales in lower-gross-margin businesses.

Segment operating expenses as a percentage of net sales in the fourth quarter rose 20 bps from 2022, primarily reflecting increased personnel and other costs.

As a result of these factors, segment operating earnings of $113.3 million in the fourth quarter of 2023, including $0.4 million of favorable foreign currency effects, compared to $110.6 million in 2022, an increase of $2.7 million or 2.4%.

Segment net sales of $456.6 million in the fourth quarter of 2024 represented an increase of $5.8 million, or 1.3%, from 2023 levels, reflecting a $7.3 million, or 1.6%, organic sales increase, partially offset by $1.5 million of unfavorable foreign currency translation.

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

Segment gross margin in the fourth quarter improved 200 bps from last year primarily reflecting increased sales of higher-gross-margin products and benefits from the segment’s RCI initiatives.

Segment operating expenses as a percentage of net sales in the fourth quarter rose 50 bps from 2023 primarily due to increased personnel and other costs.

As a result of these factors, segment operating earnings of $121.4 million in the fourth quarter of 2024 compared to $113.3 million in 2023, an increase of $8.1 million or 7.1%.

Operating margin for the Repair Systems & Information Group of 26.6% in the quarter compared to 25.1% last year.

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Segment operating earnings $ 66.7 66.4 % $ 67.9 69.9 % $ (1.2) (1.8) %

Financial services revenue of $97.2 million in the fourth quarter of 2023 increased $8.9 million, or 10.1%, from last year.

Financial services revenue of $100.5 million in the fourth quarter of 2024 represented an increase of $3.3 million, or 3.4%, from last year.

In the fourth quarters of 2024 and 2023, the respective average yields on finance receivables were 17.7% and 17.8% .

In the fourth quarters of 2024 and 2023 , the average yields on contract receivables were 9.1% and 8.9% , respectively.

Originations of $303.1 million in the fourth quarter of 2023 represented an increase of $3.4 million, or 1.1%, from 2022 levels.

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

The increase in provisions reflects both the growth of the portfolio, as well as a return to more typical pre-pandemic rates of provision.

Originations of $285.1 million in the fourth quarter of 2024 represented a decrease of $18.0 million, or 5.9%, from 2023 levels.

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

As a percentage of the average financial services portfolio, financial services expenses were 1.3% in the fourth quarter of 2024 and 1.2% in 2023.

As a result of these factors, segment operating earnings in the fourth quarter of 2023 increased $4.0 million, or 6.3%, from 2022 levels.

As a result of these factors, segment operating earnings of $66.7 million in the fourth quarter of 2024 compared to $67.9 million in 2023, a decrease of $1.2 million, or 1.8%.

See Note 1 and Note 4 to the Consolidated Financial Statements for additional information on financial services.

Snap-on’s fourth quarter 2024 general corporate expenses of $26.6 million compared to $20.5 million last year.

The year-over-year increase primarily reflects a benefit from the recovery of costs associated with a legal matter that occurred in the fourth quarter of 2023.

2024 ANNUAL REPORT 39

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Snap-on’s fourth quarter 2023 general corporate expenses of $20.5 million compared to $26.6 million last year.

The year-over-year decrease in corporate expenses primarily reflects the recovery of costs associated with a legal matter.

Non-GAAP Supplemental Data

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SNAP-ON INCORPORATED

Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheet Information as of 2023 and 2022 year end is as follows:

Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheets Information as of 2024 and 2023 year end is as follows:

Operations* Financial Services

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheet Information (continued):

Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheets Information (continued):

Operations* Financial Services

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Snap-on’s growth has historically been funded by a combination of cash provided by operating activities and debt financing.

Snap-on believes that its cash from operations and collections of finance receivables, coupled with its sources of borrowings and available cash on hand, are sufficient to fund its currently anticipated requirements for scheduled debt repayments, payments of interest and dividends, new receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise.

Snap-on believes that its cash from operations and collections of finance receivables, coupled with its sources of borrowings and available cash on hand, are sufficient to fund its currently anticipated requirements for scheduled debt repayments, payments of interest and dividends, new receivables originated by our financial services businesses, capital expenditures, working capital, funding of pension plans, and share repurchases and acquisitions, if and as they arise.

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

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

As of 2023 year end, working capital (current assets less current liabilities) of $2,710.4 million represented an increase of $313.1 million from $2,397.3 million as of 2022 year end primarily as a result of other net changes in working capital discussed below.

As of 2024 year end, working capital (current assets less current liabilities) of $3,027.9 million represented an increase of $317.5 million from $2,710.4 million as of 2023 year end primarily as a result of the net changes in working capital discussed below.

The following represents the company’s working capital position as of 2024 and 2023 year end:

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(ii) $837.8 million of cash from collections of finance receivables;

and (iii) $113.6 million of cash proceeds from stock purchase plan and stock option exercises.

and (iii) $92.3 million of cash proceeds from stock purchase plans and stock option exercises.

These increases in cash and cash equivalents were partially offset by:

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(iv) the funding of $83.5 million for capital expenditures;

(v) the funding of $42.6 million for acquisitions;

and (vi) net repayments of other short-term borrowings of $1.7 million.

and (v) net repayments of other short-term borrowings of $1.3 million.

Of the $1,360.5 million of cash and cash equivalents as of 2024 year end, $494.1 million was held outside of the United States.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Trade and other accounts receivable – net of $791.3 million as of 2023 year end represented an increase of $29.6 million from 2022 year-end levels primarily due to higher sales, $9.3 million of foreign currency translation and $4.1 million from acquisitions.

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 at the respective 2023 and 2022 year ends.

Trade and other accounts receivable – net of $815.6 million as of 2024 year end represented an increase of $24.3 million from 2023 year-end levels primarily due to an increase in days sales outstanding, partially offset by $21.2 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 of sales, times 360 days) was 62 days and 60 days at the respective 2024 and 2023 year ends.

The current portions of net finance and contract receivables of $730.3 million as of 2024 year end compared to $714.9 million at 2023 year end.

The long-term portions of net finance and contract receivables of $1,730.3 million as of 2024 year end compared to $1,692.1 million at 2023 year end.

The combined $180.3 million increase in net current and long-term finance and contract receivables compared to 2022 year-end levels is primarily due to an increase in net receivable originations and $9.1 million of foreign currency translation.

Inventories – net of $1,005.9 million as of 2023 year end decreased $27.2 million from 2022 year-end levels primarily due to $47.8 million of inventory reductions as a result of easing supply chain disruptions, partially offset by $16.6 million of foreign currency translation and $4.0 million related to acquisitions.

As of 2023 and 2022 year end, 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 2.3 turns and 2.5 turns, respectively.

The combined $53.6 million increase in net current and long-term finance and contract receivables compared to 2023 year-end levels is primarily due to net receivable originations, partially offset by $17.0 million of foreign currency translation.

Inventories – net of $943.4 million as of 2024 year end decreased $62.5 million from 2023 year-end levels primarily due to easing supply chain disruptions and $31.7 million of foreign currency translation.

As of 2024 and 2023 year end, inventory turns (trailing 12 months of cost of goods sold, divided by the average of the beginning and ending inventory balances for the trailing 12 months) were 2.4 turns and 2.3 turns, respectively.

Inventories accounted for using the first-in, first-out (“FIFO”) method as of 2024 and 2023 year end approximated 57% and 59% of total inventories, respectively.

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At 2024 year end, the weighted-average rate on outstanding notes payable of 9.5% compared with 11.1% in 2023.

Accounts payable of $238.0 million as of 2023 year end represented a decrease of $49.0 million from 2022 year-end levels, primarily due to the timing of payments, partially offset by $3.0 million of foreign currency translation and $1.6 million related to acquisitions.

Other accrued liabilities of $447.4 million as of 2023 year end represented an increase of $11.0 million from 2022 year-end levels, primarily due to higher income tax and other tax accruals, $3.7 million of foreign currency translation and $0.8 million related to acquisitions.

Accounts payable of $265.9 million as of 2024 year end represented an increase of $27.9 million from 2023 year-end levels, primarily due to the timing of payments, partially offset by $3.8 million of foreign currency translation.

Other accrued liabilities of $457.7 million as of 2024 year end represented an increase of $10.3 million from 2023 year-end levels.

Long-term debt of $1,185.5 million as of 2024 year end consisted of:

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and (iii) $500.0 million of 3.10% notes that mature on May 1, 2050 (the “2050 Notes”), partially offset by $14.5 million of unamortized debt issuance costs and issuance discounts.

On September 12, 2023, Snap-on entered into a $900 million multicurrency revolving credit facility that terminates on September 12, 2028 (the “Credit Facility”), which amended and restated in its entirety Snap-on’s previous $800 million multicurrency 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 years ended and as of December 30, 2023 or December 31, 2022.

No amounts were borrowed or outstanding under the Credit Facility during the years ended and as of December 28, 2024 or December 30, 2023.

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 December 30, 2023, the company’s actual ratios of 0.05 and 0.18 respectively, were both within the permitted ranges set forth in this financial covenant.

As of December 28, 2024, the company’s consolidated cash balance, net of certain adjustments, exceeded consolidated debt resulting in actual ratios of (0.01) and (0.05), respectively.

Both ratios are 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.

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Net cash provided by operating activities of $1,217.5 million in 2024 increased $63.3 million from $1,154.2 million in 2023.

The $479.0 million increase is primarily due to a $352.9 million change in net operating assets and liabilities, and a $100.7 million increase in net earnings.

The increase is primarily due to a $34.3 million increase in net earnings and a $18.0 million change in net operating assets and liabilities.

Depreciation expense was $72.7 million in 2024 and $72.2 million in 2023.

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Net cash used by investing activities in 2023 also included $42.6 million for the acquisitions of Mountz and SAVTEQ.

Net cash used by investing activities in 2022 included $0.5 million of cash provided by acquisitions.

See Note 3 to the Consolidated Financial Statements for information about acquisitions.

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Net cash used by financing activities of $649.8 million in 2024 included net repayments of other short-term borrowings of $1.3 million.

Net cash used by financing activities of $485.0 million in 2022 included net proceeds from other short-term borrowings of $1.6 million.

Net cash used by financing activities of $572.9 million in 2023 included net repayments of other short-term borrowings of $1.7 million.

2024 ANNUAL REPORT 45

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Proceeds from stock purchase plan and stock option exercises totaled $113.6 million in 2023 and $55.0 million in 2022.

Proceeds from stock purchase plans and stock option exercises totaled $92.3 million in 2024 and $113.6 million in 2023.

In 2024, Snap-on repurchased 952,000 shares of its common stock for $290.0 million under its previously announced share repurchase programs.

As of 2023 year end, Snap-on had remaining availability to repurchase up to an additional $282.9 million in common stock pursuant to its Board’s authorizations.

Snap-on repurchased 1,126,000 shares of its common stock for $294.7 million in 2023.

As of 2024 year end, Snap-on had remaining availability to repurchase up to an additional $429.4 million in common stock pursuant to its Board’s authorizations.

The repurchase of Snap-on common stock to offset dilution related to equity plan issuances or for other corporate purposes is at the company’s discretion, subject to prevailing financial and market conditions.

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In recent years there has been increased public awareness, concern and focus on environmental and sustainability issues, including matters related to climate change.

The current focus on these matters is expected to result in additional and/or more restrictive regulations, and industry or third-party requirements and standards to reduce or mitigate climate change as well as other environmental or sustainability risks.

The timing of certain of these regulations and requirements has yet to be determined.

The current focus on these matters is resulting in additional and/or more restrictive regulations, disclosure requirements and industry or third-party requirements and standards to reduce or mitigate climate change as well as other environmental or sustainability risks.

Snap-on is monitoring developments in this area.

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Pension expense increases as the expected rate of return on plan assets decreases.

Lowering the expected rate of return assumption for Snap-on’s domestic pension plans’ assets by 50 bps would have increased Snap-on’s 2023 domestic pension expense by approximately $6.2 million.

Lowering the expected rate of return assumption for Snap-on’s domestic pension plans’ assets by 50 bps would have increased Snap-on’s 2024 domestic pension expense by approximatel y $6.0 million.

The objective of Snap-on’s discount rate assumption is to reflect the rate at which the pension benefits could be effectively settled.

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Prior service costs and credits resulting from plan amendments are amortized in equal annual amounts over the average remaining service period of active participants or over the average remaining life expectancy for plans with primarily inactive participants.

Pension income in 2023 was $19.0 million and Snap-on expects to have pension income of approximately $8.0 million in 2024, primarily reflecting higher amortization of pension actuarial losses.

The projected 2024 pension income is based on benefit plan status, weighted average discount rates, expected returns on plan assets, and other factors.

Pension income in 2024 was $6.9 million and Snap-on expects to have pension expense of approximately $16.8 million in 2025, primarily reflecting higher amortization of pension actuarial losses.

The projected 2025 pension expense is based on benefit plan status, weighted average discount rates, expected returns on plan assets, and other factors.

To determine the 2025 net periodic benefit cost, Snap-on is using weighted-average discount rates for its domestic and foreign pension plans of 5.6% and 4.6%, respectively, and an expected return on plan assets for its domestic pension plans of 7.5%.

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

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, it is projected that capital expenditures in 2024 will be in a range of $100 million to $110 m illion.

In 2025, Snap-on expects to make ongoing progress along its decisive runways for coherent growth, leveraging capabilities already proven in the automotive repair arena, 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 2025 will approximate $100 million.

Snap-on currently anticipates that its full-year 2025 effective income tax rate will be in the range of 22% to 23%.

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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 7. Management’s Discussion and Analysis