Quarterly Financial Review

Third Quarter 2023

Cautionary Statement

  • These slides should be read in conjunction with comments from the October 19, 2023 conference call. The financial statement information included herein is unaudited.
  • Statements made during the October 19, 2023 conference call and/or information included in this presentation may contain statements, including earnings projections, that are forward-looking in nature and, accordingly, are subject to risks and uncertainties regarding Snap-on's expected results; actual results may differ materially from those described or contemplated in these forward-looking statements. Factors that may cause actual results to differ materially from those contained in the forward- looking statements, including those found in Snap-on's reports filed with the Securities and Exchange Commission, and the information under "Safe Harbor" and "Risk Factors" headings in its most recent Annual Report on Form 10-K, which are incorporated herein by reference. Snap-on disclaims any responsibility to update any forward-looking statement provided during the October 19, 2023 conference call and/or included in this presentation, except as required by law.
  • This presentation includes certain non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these non-GAAP measures is included in Snap-on's October 19, 2023 press release and Form 8-K, which can be found on the company's website in the investors section at www.snapon.com.

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© 2023 Snap-on Incorporated

Nick Pinchuk

Chairman and Chief

Executive Officer

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© 2023 Snap-on Incorporated

Aldo Pagliari

Senior Vice President and

Chief Financial Officer

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© 2023 Snap-on Incorporated

Consolidated Results

Q3 2023

Q3 2022

($ in millions, except per share data - unaudited)

$

%

$

%

Change

Net sales

$ 1,159.3

$ 1,102.5

5.2 %

➢ Organic sales

52.4

4.7 %

➢ Currency translation

4.4

0.5 %

Gross profit

$

578.2

49.9 %

$

532.6

48.3 %

Operating expenses

333.0

28.7 %

309.1

28.0 %

Operating earnings before financial services

$

245.2

21.2 %

$

223.5

20.3 %

9.7 %

Financial services revenue

$

94.9

$

87.3

8.7 %

Financial services operating earnings

69.4

66.4

4.5 %

Operating earnings

$

314.6

25.1 %

$

289.9

24.4 %

8.5 %

Diluted EPS - as reported

$

4.51

$

4.14

8.9 %

  • Net sales of $1,159.3 million in the period represented an increase of $56.8 million, or 5.2%, from 2022 levels, reflecting a 4.7% organic sales gain and $4.4 million of favorable foreign currency translation
  • Gross margin improved 160 basis points (bps) to 49.9% from 48.3% last year primarily due to increased sales volumes and pricing actions, lower material and other costs, and benefits from the company's Rapid Continuous Improvement ("RCI") initiatives, partially offset by 50 bps of unfavorable foreign currency effects
  • Operating expenses as a percentage of sales increased 70 bps to 28.7% from 28.0% last year primarily due to increased personnel and other costs
  • As a percentage of net sales, operating earnings before financial services improved 90 bps to 21.2% from 20.3% last year

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© 2023 Snap-on Incorporated

Commercial & Industrial

($ in millions - unaudited)

Q3 2023

Q3 2022

Change

Segment sales

$

366.4

$

356.8

2.7 %

➢ Organic sales

11.2

3.2 %

➢ Currency translation

(1.6)

(0.5)%

Gross profit

$

143.0

$

131.8

% of sales

39.0 %

36.9 %

Operating expenses

$

84.9

$

79.5

% of sales

23.1 %

22.2 %

Operating earnings

$

58.1

$

52.3

% of sales

15.9 %

14.7 %

120 bps

  • Organic sales up $11.2 million, or 3.2%, primarily reflecting a double-digit gain in sales to customers in critical industries partially offset by a double-digit decline in the segment's Asia Pacific operations
  • Gross margin improved 210 bps to 39.0% from 2022 primarily due to increased sales volumes in the higher-gross-margin critical industry sector, pricing actions, and benefits from RCI initiatives, partially offset by 60 bps of unfavorable foreign currency effects
  • Operating expenses as a percentage of sales increased 90 bps to 23.1% from 22.2% last year primarily due to increased sales in higher-expense businesses, as well as increased personnel and other costs
  • Operating earnings of $58.1 million, including $2.9 million of unfavorable foreign currency effects, reflected an increase of $5.8 million, or 11.1%, compared to $52.3 million in 2022; the operating margin improved 120 bps to 15.9% from last year

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© 2023 Snap-on Incorporated

Snap-on Tools

($ in millions - unaudited)

Q3 2023

Q3 2022

Change

Segment sales

$

515.4

$

496.6

3.8 %

➢ Organic sales

18.3

3.7 %

➢ Currency translation

0.5

0.1 %

Gross profit

$

238.6

$

223.2

% of sales

46.3 %

44.9 %

Operating expenses

$

125.2

$

121.0

% of sales

24.3 %

24.3 %

Operating earnings

$

113.4

$

102.2

% of sales

22.0 %

20.6 %

140 bps

  • Organic sales up $18.3 million, or 3.7%, reflecting a double-digit gain in the segment's international operations and a low single-digit increase in the U.S. operations
  • Gross margin improved 140 bps to 46.3% from 44.9% last year primarily reflecting increased sales volumes and pricing actions, and benefits from the segment's RCI initiatives, partially offset by 50 bps of unfavorable foreign currency effects
  • Operating expenses as a percentage of sales was unchanged from last year with benefits from higher sales volumes offset by increased personnel and other costs
  • Operating earnings of $113.4 million, including $2.7 million of unfavorable foreign currency effects, reflected an increase of $11.2 million, or 11.0%, from 2022; the operating margin improved 140 bps to 22.0% from last year

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© 2023 Snap-on Incorporated

Repair Systems & Information

($ in millions - unaudited)

Q3 2023

Q3 2022

Change

Segment sales

$

431.8

$

414.0

4.3 %

➢ Organic sales

13.0

3.1 %

➢ Currency translation

4.8

1.2 %

Gross profit

$

196.6

$

177.6

% of sales

45.5 %

42.9 %

Operating expenses

$

91.7

$

82.2

% of sales

21.2 %

19.9 %

Operating earnings

$

104.9

$

95.4

% of sales

24.3 %

23.0 %

130 bps

  • Organic sales up $13.0 million, or 3.1 %, reflecting a high single-digit gain in sales of undercar equipment, a low single-digit increase in sales of diagnostic and repair information products to independent repair shop owners and managers, partially offset by a low single-digit decline in activity with OEM dealerships
  • Gross margin improved 260 bps to 45.5% from last year primarily due to lower material and other costs, increased sales volumes, and savings from RCI initiatives
  • Operating expenses as a percentage of sales increased 130 bps to 21.2% from last year primarily due to increased personnel and other costs
  • Operating earnings of $104.9 million, including $0.2 million of favorable foreign currency effects, reflected an increase of
    $9.5 million, or 10.0%, from $95.4 million in 2022; the operating margin improved 130 bps to 24.3% compared to 23.0% last year

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© 2023 Snap-on Incorporated

Financial Services

($ in millions - unaudited)

Q3 2023

Q3 2022

Change

Segment revenue

$

94.9

$

87.3

8.7 %

Operating earnings

$

69.4

$

66.4

4.5 %

Originations

$

305.2

$

300.2

1.7 %

  • Originations increased $5.0 million or 1.7%
  • Average yield on finance receivables was 17.7% in both years
  • Average yields on contract receivables were 8.8% and 8.6% in 2023 and 2022, respectively

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© 2023 Snap-on Incorporated

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Snap On Inc. published this content on 19 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 October 2023 10:50:32 UTC.