What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-12 compared with 2025-02-13 · 158 added, 150 removed, 556 unchanged (36% of the section changed)

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Management Overview

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.

We believe our 2025 operating performance demonstrates the advantages inherent in our strategy, generally making in the markets where we sell, and in our structure, our ability to produce many of our solutions in most geographies by leveraging our 36 manufacturing facilities worldwide, including our 15 plants in the United States.

Despite the complexities of the current macroeconomic and trade environments, we believe the special resilience of our markets, the considerable capability of our combined operations, and our experienced team enable us to prevail in the difficulties of today.

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

At the same time, we remained committed to 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 are high.

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;

• Enhancing the franchise network, where we continued to focus on raising franchisee productivity and improving coverage, increasing new product introductions, and refining the selling process with programs to amplify the power of our mobile van channel;

• 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;

• Further extending to critical industries, where we continued to grow our lines of products customized for specific industries, including through further integration of acquisitions;

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

• Further extending to critical industries, where we continued targeting places where tasks require repeatability and reliability, building a deep understanding of the work, and providing specialized productivity solutions for critical activities;

• Building in emerging markets, where we continued optimizing product lines, manufacturing capability, and distribution for local markets.

Our strategic priorities and plans for 2026 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.

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

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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Snap-on has significant international operations and is subject to risks inherent with foreign operations, including foreign currency translation fluctuations.

Recent Acquisitions

On November 20, 2023, Snap-on acquired certain assets of SAVTEQ, Inc.

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

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.

(“Mountz”) for a cash purchase price of $39.6 million.

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 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.

Pro forma financial information has not been presented for these acquisitions as t he net effects, individually and collectively, were neither significant nor material to Snap-on’s results of operations or financial position.

SNAP-ON INCORPORATED

Snap-on’s fiscal year ends on the Saturday that is on or nearest to December 31.

Unless otherwise indicated, references in this document to “fiscal 2024” or “2024” refer to the fiscal year ended December 28, 2024;

Unless otherwise indicated, references in this document to “fiscal 2025” or “2025” refer to the fiscal year ended January 3, 2026;

references to “fiscal 2024” or “2024” refer to the fiscal year ended December 28, 2024;

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

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

References in this document to 2025, 2024 and 2023 year end refer to January 3, 2026, December 28, 2024, and December 30, 2023, respectively.

Snap-on’s 2025 fiscal year contained 53 weeks of operating results with the extra week occurring in the fourth quarter.

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

The impact of the additional week of operations in fiscal 2025 was not material to Snap-on’s full year or fourth quarter total revenues or net earnings.

Fiscal 2024 as Compared to Fiscal 2023

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Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying growth trends in the company’s businesses and facilitates comparisons of its sales performance with prior periods.

Current Trade Environment

As disclosed in Part I, Item 1A:

Risk Factors, the company’s business is subject to risks related to, among other factors, tariffs and additional trade protection measures put in place by the United States or other countries, as well as U.S.

international trade relations, including those with China, Canada, the European Union and other nations.

Starting in the first quarter of 2025, the United States government announced additional tariffs on goods imported into the U.S.

from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response.

While the company is relatively advantaged in the tariff environment, generally manufacturing products in the markets where they are sold, its costs can be affected by trade policies.

In that regard, in the fourth quarter and for the year ended January 3, 2026, Snap-on mitigated the effects of incremental tariffs.

Summary of Consolidated Performance

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.

Consolidated net sales of $4,743.2 million in 2025 represented an increase of $35.8 million, or 0.8%, from 2024 levels, reflecting a $16.5 million, or 0.3%, organic sales gain and $19.3 million of favorable foreign currency translation.

Operating earnings before financial services of $1,045.9 million in 2025, including a $22.0 million benefit from the settlement of a legal matter (the “2025 legal settlement”), compared to $1,068.8 million in 2024, which included a $22.5 million benefit for the final payments received associated with a separate legal matter (the “2024 legal payments”) .

As a percentage of net sales, operating earnings before financial services were 22.1% compared to 22.7% last year.

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.

The effects of the benefits from the 2025 legal settlement and the 2024 legal payments (collectively, the “legal items”) were included in operating expenses, operating earnings before financial services, and operating earnings in 2025 and 2024, respectively.

Operating earnings of $1,327.7 million in 2025 compared to $1,345.7 million in 2024.

As a percentage of revenues (net sales plus financial services revenue), operating earnings were 25.8% compared to 26.3% last year.

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.

2025 ANNUAL REPORT 29

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

Net earnings attributable to Snap-on of $1,016.9 million, or $19.19 per diluted share, in 2025, included a $16.2 million, or $0.31 per diluted share, after-tax benefit from the 2025 legal settlement and an $18.5 million, or $0.35 per diluted share, after-tax year-over-year increase in non-service net periodic benefit costs.

Net earnings attributable to Snap-on of $1,043.9 million, or $19.51 per diluted share, in 2024, included a $17.5 million, or $0.32 per diluted share, after-tax benefit from the 2024 legal payments.

Summary of Segment Performance

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 $1,476.8 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%.

Segment net sales of $1,457.5 million in 2025 represented a decrease of $19.3 million, or 1.3%, from 2024 levels, reflecting a $30.9 million, or 2.1%, organic sales decline, partially offset by $11.6 million of favorable foreign currency translation.

The organic decrease is primarily due to a mid single-digit reduction in the segment’s Asia Pacific operations and a low single-digit decline in the European-based hand tools business, partially offset by a mid single-digit increase in specialty torque.

Segment operating earnings of $218.2 million in 2025 compared to $242.1 million in 2024.

The Commercial & Industrial Group intends to focus on the following strategic priorities in 2026:

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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 $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%.

Segment net sales of $1,964.9 million in 2025 represented a decrease of $24.3 million, or 1.2%, from 2024 levels.

T he decline is due to a low single-digit decrease in the U.S., partially offset by a low single-digit gain in the segment’s international operations.

Segment o perating earnings of $426.3 million in 2025 compared to $447.3 million in 2024.

The Snap-on Tools Group intends to focus on the following strategic priorities in 2026:

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• 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 $1,797.9 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 consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and original equipment manufacturer (“OEM”) dealership service and repair shops (“OEM dealerships”) through direct and distributor channels.

Segment net sales of $1,877.1 million in 2025 represented an increase of $79.2 million, or 4.4%, from 2024 levels, reflecting a $70.6 million, or 3.9%, organic sales gain and $8.6 million of favorable foreign currency translation.

The organic improvement reflects a double-digit increase in activity with OEM dealerships and a mid single-digit rise 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 o perating earnings of $500.8 million in 2025, including a $22.0 million benefit from the 2025 legal settlement, compared to $455.2 million in 2024.

SNAP-ON INCORPORATED

The Repair Systems & Information Group intends to focus on the following strategic priorities in 2026:

• Expanding the product offering with new products and services, thereby providing more to sell to repair shop owners and managers;

• Extending the product offering with new products and services, thereby providing more to sell to repair shop owners and managers;

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

• Further building our proprietary databases to enhance software solutions;

• Further building our proprietary databases to enhance software solutions, including using artificial intelligence (“AI”) to accelerate expansion in that arena;

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

• Increasing geographic penetration, including in emerging markets.

SNAP-ON INCORPORATED

Financial Services generates revenue from various financing programs and is a strategic partner of the company’s mobile franchise van channel.

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Net cash provided by operating activities of $1,081.7 million in 2025 compared to $1,217.5 million in 2024.

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.

The $135.8 million decrease is primarily due to a $26.6 million decline in net earnings and a $105.6 million change in net operating assets and liabilities.

Net cash used by investing activities of $73.1 million in 2025 included additions to finance receivables of $913.6 million, which were partially offset by collections of $888.9 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.

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

Capital expenditures in 2025 and 2024 totaled $76.0 million and $83.5 million, respectively.

Capital expenditures in both years included continued investments related to the company’s execution of its strategic growth initiatives and Value Creation Processes around safety, quality, customer connection, innovation and RCI.

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 $92.3 million of proceeds from stock purchase plans and stock option exercises.

Net cash used by financing activities of $749.9 million in 2025 included $462.2 million for dividend payments to shareholders and $328.6 million for the repurchase of 987,000 shares of Snap-on’s common stock.

These amounts were partially offset by $73.9 million of proceeds from stock purchase plans and stock option exercises, and net proceeds from other short-term borrowings of $3.3 million.

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(25.4) (0.5) % (25.0) (0.5) % (0.4) (1.6) %

Net earnings attributable to Snap-on Inc.

$ 1,043.9 20.4 % $ 1,011.1 19.8 % $ 32.8 3.2 %

Net earnings attributable to Snap-on Incorporated $ 1,016.9 19.7 % $ 1,043.9 20.4 % $ (27.0) (2.6) %

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 $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 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.

Net sales of $4,743.2 million in 2025 represented an increase of $35.8 million, or 0.8%, from 2024 levels, reflecting a $16.5 million, or 0.3%, organic sales gain and $19.3 million of favorable foreign currency translation.

Gross profit of $2,385.4 million in 2025 compared to $2,377.9 million last year.

Gross margin (gross profit as a percentage of net sales) decreased 20 basis points (100 basis points (“bps”) equals 1.0 percent) from 2024 reflecting 20 bps of unfavorable foreign currency effects.

The impact of tariffs in 2025 was largely offset by benefits from the company’s RCI initiatives.

Operating expenses of $1,339.5 million in 2025, including a $22.0 million benefit from the 2025 legal settlement, compared to $1,309.1 million last year, which included a $22.5 million benefit from the 2024 legal payments .

Operating expenses as a percentage of net sales rose 40 bps from last year primarily due to increased brand-building, personnel and other costs.

The effects of the legal items were included in operating expenses, operating earnings before financial services, and operating earnings in 2025 and 2024, respectively.

As a percentage of net sales, the legal items contributed a 50 bps benefit to operating expenses and operating earnings before financial services in their respective periods.

As a percentage of revenues, operating earnings also included a 40 bps benefit from the legal items in both 2025 and 2024.

Therefore, the legal items had no net effect on these year-over-year comparisons.

Operating earnings before financial services of $1,045.9 million in 2025 compared to $1,068.8 million in 2024.

As a percentage of net sales, operating earnings before financial services were 22.1% compared to 22.7% last year.

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Financial services operating earnings of $281.8 million in 2025 compared to $276.9 million in 2024 .

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.

Operating earnings of $1,327.7 million in 2025 compared to $1,345.7 million in 2024.

As a percentage of revenues, operating earnings were 25.8% compared to 26.3% last year.

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

Interest expense in 2025 increased $0.9 million from last year.

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

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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.

In 2025, other income (expense) - net included $23.9 million of increased year-over-year non-service net periodic benefit costs, primarily reflecting higher amortization of actuarial losses.

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 in 2025 of $1,016.9 million, or $19.19 per diluted share, included a $16.2 million, or $0.31 per diluted share, after-tax benefit from the 2025 legal settlement and an $18.5 million, or $0.35 per diluted share, after-tax, year-over-year increase in non-service net periodic benefit costs.

Net earnings attributable to Snap-on in 2024 of $1,043.9 million, or $19.51 per diluted share, included a $17.5 million, or $0.32 per diluted share, after-tax benefit from the 2024 legal payments.

Segment Results

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 operating segments, which represent Snap-on’s reportable segments, are based on the organizational structure used by the Chief Executive Office, its CODM, to make operating and investment determinations and to assess performance.

Snap-on’s reportable operating segments are:

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

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.

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

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Segment operating earnings $ 218.2 15.0 % $ 242.1 16.4 % $ (23.9) (9.9) %

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.

Segment gross margin in 2025 decreased 70 bps from last year primarily reflecting the reduced sales volumes, higher material and other costs, and 30 bps of unfavorable currency effects, partially offset by savings from the segment’s RCI initiatives.

2025 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%.

During the fourth quarter of 2025, Snap-on refined its footprint and aspects of its go-to-market strategy within the Commercial & Industrial Group.

These activities included the sale of a building for a net gain of $15.9 million, the retirement of certain trademarks at a cost of $8.9 million, and restructuring charges of $2.5 million (collectively, the “2025 footprint actions”).

The 2025 footprint actions resulted in a net benefit to operating expenses of $4.5 million.

Segment operating expenses as a percentage of net sales in 2025 rose 70 bps as compared to 2024 primarily due to the impact of lower sales volumes, and increased personnel and other costs, partially offset by the net benefit from the 2025 footprint actions.

As a result of these factors, segment operating earnings of $218.2 million in 2025 compared to $242.1 million in 2024.

Segment operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.0% in 2025 compared to 16.4% last year.

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Segment operating earnings $ 426.3 21.7 % $ 447.3 22.5 % $ (21.0) (4.7) %

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%.

Segment net sales of $1,964.9 million in 2025 represented a decrease of $24.3 million, or 1.2%, from 2024 levels.

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

Segment gross margin in 2025 decreased 30 bps from last year primarily as a result of the reduced volumes.

Segment operating expenses as a percentage of net sales in 2025 rose 50 bps as compared to 2024 primarily due to the lower sales volumes, as well as increased brand-building and other costs.

As a result of these factors, segment operating earnings of $426.3 million in 2025 compared to $447.3 million in 2024.

Operating margin for the Snap‑on Tools Group of 21.7% in 2025 compared to 22.5% last year.

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Segment operating earnings $ 500.8 26.7 % $ 455.2 25.3 % $ 45.6 10.0 %

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.

Segment gross margin in 2025 improved 40 bps from last year primarily due to the increased sales and benefits from the segment’s RCI initiatives, partially offset by higher material and other costs.

Segment operating expenses in 2025 included a $22.0 million benefit from the 2025 legal settlement.

Segment operating expenses as a percentage of net sales in 2025 improved 100 bps from 2024 primarily reflecting a 120 bps benefit from the 2025 legal settlement.

SNAP-ON INCORPORATED

As a result of these factors, segment operating earnings of $500.8 million in 2025, including a $22.0 million benefit from the 2025 legal settlement, compared to $455.2 million in 2024.

Operating margin for the Repair Systems & Information Group of 26.7% in 2025 compared to 25.3% last year.

Financial Services

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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 $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%.

Financial services revenue of $412.9 million in 2025 represented an increase of $11.9 million, or 3.0%, from 2024, and included $7.4 million of revenue resulting from a full additional week of interest income from the 53-week 2025 fiscal year.

In 2025 and 2024, the respective average yields on finance receivables were 17.6% and 17.7%.

In 2025 and 2024 , the average yields on contract receivables were 9.1% and 9.0% , respectively.

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

Financial services expenses in 2025 increased $7.0 million primarily due to $2.4 million of higher provisions for credit losses, as well as increased personnel and other costs.

As a percentage of the average financial services portfolio, financial services expenses were 5.2% in 2025 and 5.0% in 2024.

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%.

As a result of these factors, segment operating earnings of $281.8 million in 2025 compared to $276.9 million last year .

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 2025 of $99.4 million compared to $75.8 million recorded in 2024 .

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

The year-over-year increase primarily reflects the benefits from the legal payments received in 2024.

2025 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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(6.3) (0.4) % (6.1) (0.4) % (0.2) (3.3) %

Net earnings attributable to Snap-on Inc.

$ 258.1 19.9 % $ 255.3 19.7 % $ 2.8 1.1 %

Net earnings attributable to Snap-on Incorporated $ 260.7 19.5 % $ 258.1 19.9 % $ 2.6 1.0 %

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 $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 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.

Net sales of $1,231.9 million in the fourth quarter of 2025 represented an increase of $33.2 million, or 2.8%, from 2024 levels, reflecting a $17.6 million, or 1.4%, organic gain and $15.6 million of favorable foreign currency translation.

Gross profit of $605.5 million in the fourth quarter of 2025 compared to $596.1 million last year.

Gross margin in the quarter decreased 50 bps from the fourth quarter of 2024 primarily due to higher material and other costs, partially offset by benefits from the company’s RCI initiatives.

Operating expenses of $340.3 million in the fourth quarter of 2025 compared to $330.9 million in 2024.

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%.

Operating expenses as a percentage of net sales rose 10 bps from last year.

Operating earnings before financial services of $265.2 million in the fourth quarter of 2025 was unchanged from 2024.

As a percentage of net sales, operating earnings before financial services were 21.5% compared to 22.1% last year.

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As a percentage of revenues, operating earnings were 25.3% in the quarter compared to 25.5% last year.

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

Interest expense in the fourth quarter of 2025 increased $1.1 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 interest income , non-service components of net periodic benefit costs, and net gains and losses associated with hedging and currency exchange rate transactions.

In the fourth quarter of 2025, other income (expense) - net included $6.0 million of increased year-over-year non-service net periodic benefit costs, primarily reflecting higher amortization of actuarial losses.

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

2024 ANNUAL REPORT 37

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

The effective income tax rate on earnings attributable to Snap-on in the fourth quarter was 22.3% in 2025 and 22.5% in 2024.

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

2025 ANNUAL REPORT 37

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

Net earnings attributable to Snap-on of $260.7 million, or $4.94 per diluted share, in the fourth quarter of 2025 compared to $258.1 million, or $4.82 per diluted share, in the fourth quarter of 2024.

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Segment operating earnings $ 60.6 15.2 % $ 63.5 16.7 % $ (2.9) (4.6) %

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% .

Segment net sales of $398.1 million in the fourth quarter of 2025 represented an increase of $18.9 million, or 5.0%, fro m 2024 levels, reflecting an $11.0 million, or 2.8%, organic gain and $7.9 million of favorable foreign currency translation.

The organic increase is primarily due to a mid single-digit rise in activity with customers in critical industries, a double-digit gain in the power tools operation, and a mid single-digit increase in specialty torque, partially offset by lower sales to U.S.

markets by the Asia Pacific business.

Segment gross margin in the fourth quarter decreased 240 bps from last year primarily reflecting higher material and other costs, increased sales volumes in lower-gross-margin businesses, and 30 bps of unfavorable foreign currency effects, partially offset by savings from the segment’s RCI initiatives.

Segment operating expenses as a percentage of net sales in the fourth quarter of 2025 improved 90 bps from 2024 primarily due to the net benefit from the 2025 footprint actions.

As a result of these factors, segment operating earnings of $60.6 million in the fourth quarter of 2025 compared to $63.5 million in 2024.

Operating margin for the Commercial & Industrial Group of 15.2% in the quarter compared to 16.7% last year.

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Segment net sales of $505.0 million in the fourth quarter of 2025 represented a decrease of $1.6 million, or 0.3%, from 2024 levels, reflecting a $3.4 million, or 0.7%, organic sales decline, partially offset by $1.8 million of favorable foreign currency translation.

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%.

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

Segment gross margin in the fourth quarter improved 150 bps from last year primarily due to a year-over-year shift in product mix and savings from the segment’s RCI initiatives.

Segment operating expenses as a percentage of net sales in the fourth quarter rose 140 bps from 2024 primarily reflecting increased brand-building and other costs.

As a result of these factors, segment operating earnings of $107.3 million in the fourth quarter of 2025 compared to $106.9 million in 2024.

Operating margin for the Snap‑on Tools Group of 21.2% in the quarter compared to 21.1% last year.

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Segment operating earnings $ 117.7 25.2 % $ 121.4 26.6 % $ (3.7) (3.0) %

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%.

Segment net sales of $467.8 million in the fourth quarter of 2025 represented an increase of $11.2 million, or 2.5%, from 2024 levels, reflecting a $4.8 million, or 1.0%, organic sales gain and $6.4 million of favorable foreign currency translation.

The organic improvement includes low single-digit gains in activity with OEM dealerships and in sales of diagnostic and repair information products to independent repair shop owners and managers, while sales of undercar equipment were essentially flat.

Segment gross margin in the fourth quarter decreased 10 bps from last year.

The impact of tariffs in 2025 was largely offset by benefits from the segment’s RCI initiatives.

Segment operating expenses as a percentage of net sales in the fourth quarter rose 130 bps from 2024 primarily due to increased activity in higher-expense businesses and a rise in other costs.

As a result of these factors, segment operating earnings of $117.7 million in the fourth quarter of 2025 compared to $121.4 million in 2024.

Operating margin for the Repair Systems & Information Group of 25.2% in the quarter compared to 26.6% last year.

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Segment operating earnings $ 74.4 68.9 % $ 66.7 66.4 % $ 7.7 11.5 %

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.

Financial services revenue of $108.0 million in the fourth quarter of 2025 represented an increase of $7.5 million, or 7.5%, from 2024, primarily reflecting $7.4 million of higher revenue as a result of a full additional week of interest income from the 53-week 2025 fiscal year.

In the fourth quarters of 2025 and 2024, the respective average yields on finance receivables were 17.6% and 17.7% .

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

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 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%.

In the fourth quarters of 2025 and 2024 , the average yield on contract receivables was 9.1% in both periods.

Originations of $285.1 million in the quarter were unchanged from last year.

Financial services expenses in the fourth quarter of 2025 of $33.6 million compared to $33.8 million last year.

As a percentage of the average financial services portfolio, financial services expenses were 1.3% in the fourth quarters of both 2025 and 2024.

As a result of these factors, segment operating earnings of $74.4 million in the fourth quarter of 2025 compared to $66.7 million in 2024.

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

Snap-on’s fourth quarter 2025 general corporate expenses of $20.4 million compared to $26.6 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.

The year-over-year decrease primarily reflects lower performance-based compensation and other costs.

2025 ANNUAL REPORT 39

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Earnings before equity earnings 882.5 911.4 159.8 157.5

Financial services – net earnings attributable to Snap-on

Financial services – net earnings attributable to Snap-on Incorporated

159.8 157.5 — —

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(25.4) (25.0) — —

Net earnings attributable to Snap-on $ 1,043.9 $ 1,011.1 $ 157.5 $ 155.0

Net earnings attributable to Snap-on Incorporated $ 1,016.9 $ 1,043.9 $ 159.8 $ 157.5

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

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Total liabilities 1,247.6 1,270.4 2,076.9 2,088.4

Total shareholders’ equity attributable to Snap-on

Total shareholders’ equity attributable to Snap-on Incorporated

5,931.8 5,394.1 400.3 403.5

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(iii) the repurchase of 987,000 shares of the company’s common stock for $328.6 million;

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

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

and (iv) the funding of $76.0 million for capital expenditures.

Of the $1,624.5 million of cash and cash equivalents as of 2025 year end, $548.5 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 $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.

Trade and other accounts receivable – net of $881.4 million as of 2025 year end represented an increase of $65.8 million from 2024 year-end levels primarily due to a higher mix of sales with longer payment terms, $25.3 million of foreign currency translation and $19.8 million related to the sale of a building.

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 67 days and 62 days at the respective 2025 and 2024 year ends.

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The long-term portions of net finance and contract receivables of $1,721.9 million as of 2025 year end compared to $1,730.3 million at 2024 year end.

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 – net of $1,025.2 million as of 2025 year end increased $81.8 million from 2024 year-end levels primaril y due to uncertainty in the current trade environment and $41.4 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 balances for the trailing 12 months) were 2.4 a s of both 2025 and 2024 year end.

Inventories accounted for using the first-in, first-out (“FIFO”) method as of 2025 and 2024 year end approximated 62% and 57% of total inventories, respectively.

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At 2025 year end, the weighted-average rate on outstanding notes payable of 15.6% compared with 9.5% in 2024.

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.

Accounts payable of $229.1 million as of 2025 year end represented a decrease of $36.8 million from 2024 year-end levels, primarily due to the timing of payments, partially offset by $5.5 million of foreign currency translation.

Other accrued liabilities of $465.1 million as of 2025 year end represented an increase of $7.4 million from 2024 year-end levels.

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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 the Credit Facility during the years ended and as of December 28, 2024 or December 30, 2023.

No amounts were borrowed or outstanding under the Credit Facility during the years ended and as of January 3, 2026, or December 28, 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 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.

As of January 3, 2026, the company’s consolidated cash balance, net of certain adjustments, exceeded consolidated debt resulting in actual ratios of (0.05) and (0.21), 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.

There was no commercial paper issued or outstanding during the years ended and as of December 28, 2024 or December 30, 2023.

SNAP-ON INCORPORATED

There was no commercial paper issued or outstanding during the years ended and as of January 3, 2026, or December 28, 2024.

Snap-on’s Credit Facility and other debt agreements also contain certain usual and customary borrowing, affirmative, negative and maintenance covenants.

As of 2025 year end, Snap-on was in compliance with all covenants of its Credit Facility and other debt agreements.

SNAP-ON INCORPORATED

Snap-on believes it has sufficient available cash and access to both committed and uncommitted credit facilities to cover its expected funding needs on both a short-term and long-term basis.

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Snap-on intends to make contributions of $4.5 million to its foreign pension plans and $3.7 million to its domestic pension plans in 2026, as required by law.

Depending on market and other conditions, Snap-on may make discretionary cash contributions to its pension plans in 2025.

Depending on market and other conditions, Snap-on may make additional discretionary cash contributions to its pension plans in 2026.

Snap-on’s long-term financing strategy is to maintain continuous access to the debt markets to accommodate its liquidity needs, including the potential use of commercial paper, additional fixed-term debt and/or securitizations.

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Operating Activities

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 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 provided by operating activities of $1,081.7 million in 2025 decreased $135.8 million from $1,217.5 million in 2024.

The decrease is primarily due to a $105.6 million change in net operating assets and liabilities and a $26.6 million decrease in net earnings.

Depreciation expense was $75.8 million in 2025 and $72.7 million in 2024.

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Investing Activities

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

Net cash used by investing activities of $73.1 million in 2025 included additions to finance receivables of $913.6 million, partially offset by collections of $888.9 million and $20.4 million received for the sale of a building and other assets.

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

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

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

Capital expenditures in 2025 and 2024 totaled $76.0 million and $83.5 million, respectively.

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Financing Activities

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 $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)

Net cash used by financing activities was $749.9 million in 2025 and $649.8 million in 2024.

Proceeds from stock purchase plans and stock option exercises totaled $73.9 million in 2025 and $92.3 million in 2024.

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Quarterly dividends in 2025 were $2.44 per share in the fourth quarter and $2.14 per share in the first three quarters ($8.86 per share for the year).

2025 ANNUAL REPORT 45

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

Quarterly dividends in 2024 were $2.14 per share in the fourth quarter and $1.86 per share in the first three quarters ($7.72 per share for the year).

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It is possible, however, that future knowledge or other developments, such as improved capability to detect substances in the environment or increasingly strict environmental laws and standards and enforcement policies, could affect the company’s handling, manufacture, use or disposal of these substances.

SNAP-ON INCORPORATED

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 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.

In recent years there has been increased public awareness on environmental and sustainability issues, which has resulted in additional and/or more restrictive regulations, disclosure requirements and industry or third-party requirements and standards globally 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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See Note 1 to the Consolidated Financial Statements for information on new accounting standards.

SNAP-ON INCORPORATED

Critical Accounting Policies and Estimates

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The allowance for credit losses on finance receivables is maintained at a level management believes is adequate to cover expected losses in Snap-on’s finance receivables portfolio as of the reporting date.

The allowance represents management’s estimate of the expected losses in the company’s finance receivables portfolio based on ongoing assessments and evaluations of credit losses over the remaining contractual life of the receivables portfolio considering collectability, historical loss experience, current conditions and future market changes.

Determination of the proper level of allowance requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, as a result, net earnings.

The allowance takes into consideration numerous quantitative and qualitative factors that include receivable type, historical loss experience, delinquency trends, collection experience, current and future economic conditions and credit risk characteristics.

Some of these factors are influenced by items such as the customers’ financial condition, past payment experience, credit bureau and proprietary Snap-on credit model information, as well as the value of the underlying collateral.

Changes in economic conditions and assumptions, including the resulting credit quality metrics relative to the performance of the finance receivables portfolio, create uncertainty and could result in changes to both the allowance for credit losses and provision for credit losses.

Changes in economic conditions and assumptions, including the resulting credit quality metrics relative to the performance of the finance receivables portfolio, create uncertainty and could result in changes to both the allowances for credit losses and provisions for credit losses.

Management utilizes established policies and procedures in an effort to ensure the estimates and assumptions are well controlled, reviewed and consistently applied.

As of December 28, 2024, the ratio of the allowance for credit losses to finance receivables was 3.63%.

As of January 3, 2026, the ratio of the allowance for credit losses to finance receivables was 3.75%.

As of December 28, 2024, the allowance ratio was 3.63%.

While management believes it exercises prudent judgment and applies reasonable assumptions in establishing its estimates for allowances for finance receivables, there can be no assurance that changes in economic conditions or other factors would not adversely impact the financial health of our customers and result in changes to the estimates used in the allowance calculation.

For reference, a 100 bps increase in the allowance ratios for finance receivables as of December 28, 2024, would have increased Snap-on’s 2024 provision for credit losses and related allowance for credit losses by approximately $20.0 million.

For reference, a 100 bps increase in the allowance ratios for finance receivables as of January 3, 2026, would have increased Snap-on’s 2025 provisions for credit losses and related allowance for credit losses by approximately $19.6 million.

For additional information on Snap-on’s allowances for credit losses, see Note 1 and Note 4 to the Consolidated Financial Statements.

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Annual impairment tests are performed by the company in the second quarter of each year using information available as of April month end.

2024 ANNUAL REPORT 47

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

Snap-on evaluates the recoverability of goodwill by estimating the future discounted cash flows of the businesses to which the goodwill relates.

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Within its four reportable operating segments, the company has identified 11 reporting units.

2025 ANNUAL REPORT 47

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

Snap-on evaluates the recoverability of goodwill by utilizing an income approach that estimates the fair value of the future discounted cash flows of the reporting units to which the goodwill relates.

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pension plans of 7.5%, the same rate used in 2025, to be used in determining pension expense for 2026.

In estimating the domestic expected return on plan assets, Snap-on utilizes a nominal returns forecasting method.

For each asset class, future returns are estimated by identifying the premium of riskier asset classes over lower risk alternatives.

The methodology constructs expected returns using a “building block” approach to the individual components of total return.

These forecasts are stated in both nominal and real (after inflation) terms.

This process first considers the long-term historical return premium based on the longest set of data available for each asset class.

These premiums, calculated using the geometric mean, are then adjusted based on current relative valuation levels, macro-economic conditions, and the expected alpha related to active investment management.

The asset return assumption is also adjusted by an implicit expense load for estimated administrative and investment-related expenses.

The process for determining the overall expected long-term return on plan assets begins by establishing long-term assumptions for core economic variables such as U.S.

Gross Domestic Product (GDP) growth and inflation, and long-term assumptions for market variables such as interest rates, credit spreads, earnings growth, and equity valuations.

When developing these variables, economic relationships and market histories are applied to a forecast of future conditions.

In addition to this valuation component, the total return calculation also factors in fundamentals such as coupons, dividend yields and earnings growth, among others by each respective asset class.

The asset return assumption is also adjusted by any expected outperformance related to active investment management and an implicit expense load for estimated administrative and investment related expenses.

Risk and correlation assumptions are developed based on historical analysis as well as an assessment of future conditions.

Since asset allocation is a key determinant of expected investment returns, the current and expected mix of plan assets are also considered when setting the assumption.

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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 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.

Pension expense was $16.9 million in 2025 and Snap-on expects pension expense of approximately $10.3 million in 2026, primarily reflecting lower amortization of pension actuarial losses.

The projected 2026 pension expense is based on benefit plan status, weighted average discount rates, expected returns on plan assets, and other factors.

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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 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.

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 are high.

In pursuit of these initiatives, we project that capital expenditures in 2026 will approximate $100 million.

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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