Business Wire | Jul 31, 2020 06:30AM EDT

Snap-on Announces Second Quarter 2020 Results

Jul. 31, 2020

KENOSHA, Wis.--(BUSINESS WIRE)--Jul. 31, 2020--Snap-on Incorporated (NYSE: SNA), a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks, today announced operating results for the second quarter of 2020.

* Net sales of $724.3 million in the second quarter of 2020 decreased $227.0 million, or 23.9% from 2019 levels, reflecting a $214.9 million, or 22.9%, organic sales decline, $14.4 million of unfavorable foreign currency translation, and $2.3 million of acquisition-related sales. The lower sales volume is primarily due to the impact of the COVID-19 pandemic. * Operating earnings before financial services for the quarter of $91.1 million, or 12.6% of sales, including $5.8 million of direct costs associated with COVID-19, $4.0 million of exit and disposal costs ("restructuring charges") for actions outside of the United States and $3.8 million of unfavorable foreign currency effects, compared to $189.9 million, or 20.0% of sales last year. Excluding the restructuring charges in 2020, operating earnings before financial services, as adjusted, of $95.1 million, or 13.1% of sales, decreased $94.8 million, or 49.9%, from 2019 levels. * Financial services revenue in the quarter of $84.6 million increased $0.5 million from 2019 levels; financial services operating earnings of $57.6 million compared to $60.6 million last year. * Consolidated operating earnings for the quarter of $148.7 million, including $5.8 million of direct COVID-19-related costs, $4.0 million of restructuring charges and $4.1 million of unfavorable currency effects, compared to $250.5 million last year. As a percentage of revenues (net sales plus financial services revenue), consolidated operating earnings were 18.4% and 24.2% in the second quarters of 2020 and 2019, respectively. Excluding the restructuring charges in 2020, consolidated operating earnings, as adjusted, of $152.7 million, or 18.9% of revenues, decreased $97.8 million, or 39.0%, from 2019 levels. * The second quarter effective income tax rate of 24.1% in 2020 was increased by 20 basis points (100 basis points "bps" equals 1.0 percent) as a result of the restructuring charges. The second quarter effective income tax rate was 23.6% in 2019. * Reported net earnings in the second quarter of 2020 of $101.2 million, or $1.85 per diluted share, compared to $180.4 million, or $3.22 per diluted share, a year ago. Excluding the restructuring charges, net earnings, as adjusted, were $104.5 million in 2020, or $1.91 per diluted share.

See "Non-GAAP Measures" below for a definition of, and further explanation about, organic sales and measures, as adjusted, excluding the restructuring charges.

"Throughout the second quarter, our sales and earnings were adversely impacted by the COVID-19 pandemic," said Nick Pinchuk, Snap-on chairman and chief executive officer. "We believe the effects of the virus can be represented in three phases: shock, or the significant stress associated with the early days; accommodation, or the gradual improvement reflecting the development of tactics to proceed safely in the COVID-19 environment; and finally, psychological recovery, or the restoration of confidence in the future. In fact, we encountered that trend as we moved from the shock of April to the accommodation reflected by the narrowing sales declines of May and June. During these times of turbulence, we continue to prioritize the health, safety and well-being of our associates, franchisees, customers and communities as we engage in our essential work. At the same time, we endeavor to strengthen our powerful product lines, reinforce our extraordinary brands, and maintain our capable team, preserving these advantages to pursue the abundant opportunities we believe will be available as the virus clears. Finally, and especially in the current situation, I want to thank our franchisees and associates worldwide for their many contributions, continued dedication, and belief in our future."

Segment Results

Commercial & Industrial Group segment net sales of $261.9 million in the quarter compared to $335.0 million last year, reflecting a $66.2 million, or 20.2%, organic sales decline and $6.9 million of unfavorable foreign currency translation. The organic decrease includes mid-teen declines in sales to customers in critical industries and in the power tools operation.

Operating earnings of $22.9 million in the period, including $3.0 million of COVID-19-related costs, $2.0 million of restructuring costs and $1.9 million of unfavorable foreign currency effects, compared to $48.9 million in 2019. The operating margin (operating earnings as a percentage of segment net sales) of 8.7% decreased from 14.6% a year ago, primarily reflecting the effects of the decreased sales volumes and lower utilization of manufacturing capacity, as well as 120 bps of COVID-19-related costs, 80 bps of restructuring charges and 50 bps of unfavorable foreign currency effects.

Snap-on Tools Group segment net sales of $323.3 million in the quarter compared to $405.8 million last year, reflecting a $79.2 million, or 19.7%, organic sales decline and $3.3 million of unfavorable foreign currency translation. The organic sales decrease includes a mid-teen decline in the United States and a nearly 40% decline in the segment's international operations.

Operating earnings of $38.4 million in the period, including $1.9 million of COVID-19-related costs, $0.6 million of restructuring charges and $1.1 million of unfavorable foreign currency effects, compared to $71.3 million in 2019. The operating margin of 11.9% decreased from 17.6% a year ago, primarily due to the lower sales volumes and costs to maintain manufacturing capacity, as well as 60 bps of COVID-19-related costs, 20 bps of restructuring charges and 20 bps of unfavorable foreign currency effects.

Repair Systems & Information Group segment net sales of $245.0 million in the quarter compared to $348.9 million last year, reflecting a $101.4 million, or 29.5%, organic sales decrease, $4.8 million of unfavorable foreign currency translation, and $2.3 million of acquisition-related sales. The organic decrease includes declines of over 30% in both sales of undercar equipment and to OEM dealerships, as well as a mid-teen decrease in sales of diagnostic and repair information products to independent repair shop owners and managers.

Operating earnings of $50.6 million in the period, including $1.4 million of restructuring charges, $0.7 million of COVID-19-related costs and $0.8 million of unfavorable foreign currency effects, compared to $88.6 million in 2019. The operating margin of 20.7% decreased from 25.4% a year ago, primarily reflecting the effects of the lower sales volume, as well as 50 bps of restructuring charges and 20 bps of COVID-19-related costs.

Financial Services operating earnings of $57.6 million on revenue of $84.6 million in the quarter compared to operating earnings of $60.6 million on revenue of $84.1 million a year ago. In the second quarter of 2020, financial services operating earnings reflected higher provisions for credit losses as compared to the prior year, which included lower provisions as a result of non-recurring favorable loss experience in the second quarter of 2019. Originations of $255.8 million in the second quarter decreased $7.6 million, or 2.9%, from 2019 levels.

Corporate expenses of $20.8 million in the second quarter of 2020 compared to $18.9 million last year.

Outlook

COVID-19 has spread across the globe during 2020 and is impacting economic activity worldwide. Snap-on experienced improving trends in the second quarter as our operations learned to accommodate the risks and safely pursue opportunities in the COVID-19 environment. In the near term, the company believes there will be continued sequential improvements, reflecting increasing levels of accommodations to the virus-related turbulence, though it cannot provide assurances on the rate of progress due to the uncertain and evolving nature and duration of the pandemic.

Snap-on is responding to the global macroeconomic challenges by deepening its Rapid Continuous Improvement (RCI), sourcing and other cost reduction initiatives. Snap-on recorded $4.0 million and $11.5 million of costs related to restructuring actions in the second quarter and first six months of 2020, respectively. Snap-on will continue to manage its cash flows and balance its capital allocation priorities, including investments and the need for further cost reduction actions; the COVID-19 pandemic makes it difficult to presently predict this balance as the company continually adjusts to the changing environment. Snap-on expects that capital expenditures in 2020 will be in a range of $75 million to $85 million, of which $29.0 million was incurred in the first six months of the year.

Despite near term uncertainty, Snap-on expects to maintain focus on 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.

Snap-on currently anticipates that its full year 2020 effective income tax rate will be in the range of 23% to 25%.

Conference Call and Webcast on July 31, 2020, at 9:00 a.m. Central Time

A discussion of this release will be webcast on Friday, July 31, 2020, at 9:00 a.m. Central Time, and a replay will be available for at least 10 days following the call. To access the webcast, visit https://www.snapon.com/EN/Investors/Investor-Events and click on the link to the call. The slide presentation accompanying the call can be accessed under the Downloads tab in the webcast viewer, as well as on the Snap-on website at https://www.snapon.com/EN/Investors/Financial-Information/Quarterly-Earnings.

Non-GAAP Measures

References in this document to "organic sales" refer to sales from continuing operations calculated in accordance with generally accepted accounting principles in the United States ("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, customer base and geographic expansion, new product development and/or pricing, and excludes sales contributions from acquired operations the company did not own as of the comparable prior-year reporting period. The company's organic sales disclosures also exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends. 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 our businesses and facilitates comparisons of our sales performance with prior periods.

For the second quarter of 2020, the company is including operating earnings before financial services, consolidated operating earnings, net earnings, diluted earnings per share and its effective tax rate, all as adjusted to exclude the impact of $4.0 million of restructuring charges ($3.3 million after tax) for exit and disposal activities.

For the six months ended June 27, 2020, the company is including operating earnings before financial services, consolidated operating earnings, net earnings, diluted earnings per share and its effective tax rate, all as adjusted to exclude the impact of $11.5 million of restructuring charges ($9.3 million after tax) for exit and disposal activities.

For the six months ended June 29, 2019, the company is including operating earnings before financial services, consolidated operating earnings, net earnings and diluted earnings per share, all as adjusted to exclude the impact of an $11.6 million benefit ($8.7 million after tax) from a legal settlement that occurred in the three months ended March 30, 2019.

Management believes that these are unusual events and therefore the non-GAAP financial measures adjusted to exclude them provide more meaningful year-over-year comparisons of the company's 2020 operating performance. For a reconciliation of the adjusted metrics, see "Reconciliation of Non-GAAP Financial Measures" below.

About Snap-on

Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, including aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education. Snap-on also derives income from various financing programs to facilitate the sales of its products and support its franchise business. Products and services are sold through the company's franchisee, company-direct, distributor and internet channels. Founded in 1920, Snap-on is a $3.7 billion, S&P 500 company headquartered in Kenosha, Wisconsin.

Forward-looking Statements

Statements in this news release that are not historical facts, including statements that (i) are in the future tense; (ii) include the words "expects," "anticipates," "intends," "approximates," or similar words that reference Snap-on or its management; (iii) are specifically identified as forward-looking; or (iv) describe Snap-on's or management's future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Snap-on cautions the reader that this news release may contain statements, including earnings projections, that are forward-looking in nature and were developed by management in good faith and, accordingly, are subject to risks and uncertainties regarding Snap-on's expected results that could cause (and in some cases have caused) actual results to differ materially from those described or contemplated in any forward-looking statement. Factors that may cause the company's actual results to differ materially from those contained in the forward-looking statements include those found in the company's reports filed with the Securities and Exchange Commission, including the information under the "Safe Harbor" and "Risk Factors" headings in its Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and any Quarterly Reports on Form 10-Q, which all are incorporated herein by reference. Snap-on disclaims any responsibility to update any forward-looking statement provided in this news release, except as required by law.

SNAP-ON INCORPORATED

Condensed Consolidated Statements of Earnings

(Amounts in millions, except per share data)

(unaudited)

Three Months Ended Six Months Ended

June 27, June 29, June 27, June 29,

2020 2019 2020 2019



Net sales $ 724.3 $ 951.3 $ 1,576.5 $ 1,873.0

Cost of goods sold (383.1 ) (477.5 ) (813.7 ) (927.6 )

Gross profit 341.2 473.8 762.8 945.4

Operating expenses (250.1 ) (283.9 ) (532.8 ) (568.1 )

Operating earnings before 91.1 189.9 230.0 377.3 financial services



Financial services revenue 84.6 84.1 170.5 169.7

Financial services expenses (27.0 ) (23.5 ) (56.0 ) (47.0 )

Operating earnings from 57.6 60.6 114.5 122.7 financial services



Operating earnings 148.7 250.5 344.5 500.0

Interest expense (13.4 ) (12.4 ) (24.8 ) (24.9 )

Other income (expense) - net 2.0 2.1 3.5 3.6

Earnings before income taxes 137.3 240.2 323.2 478.7 and equity earnings

Income tax expense (31.9 ) (55.6 ) (75.8 ) (112.5 )

Earnings before equity 105.4 184.6 247.4 366.2 earnings

Equity earnings, net of tax 0.5 0.3 0.5 0.8

Net earnings 105.9 184.9 247.9 367.0

Net earnings attributable to (4.7 ) (4.5 ) (9.5 ) (8.7 )noncontrolling interests

Net earnings attributable to $ 101.2 $ 180.4 $ 238.4 $ 358.3 Snap-on Inc.





Net earnings per shareattributable to Snap-on Inc.:

Basic $ 1.86 $ 3.27 $ 4.37 $ 6.47

Diluted 1.85 3.22 4.34 6.38



Weighted-average shares outstanding:

Basic 54.4 55.2 54.5 55.4

Effect of dilutive 0.4 0.8 0.4 0.8securities

Diluted 54.8 56.0 54.9 56.2

SNAP-ON INCORPORATED

Supplemental Segment Information

(Amounts in millions)

(unaudited)

Three Months Ended Six Months Ended

June 27, June 29, June 27, June 29,

2020 2019 2020 2019

Net sales:

Commercial & $ 261.9 $ 335.0 $ 561.8 $ 657.5 Industrial Group

Snap-on Tools 323.3 405.8 699.2 816.0 Group

Repair Systems & 245.0 348.9 559.6 676.8 Information Group

Segment net sales 830.2 1,089.7 1,820.6 2,150.3

Intersegment (105.9 ) (138.4 ) (244.1 ) (277.3 ) eliminations

Total net sales 724.3 951.3 1,576.5 1,873.0

Financial Services 84.6 84.1 170.5 169.7 revenue

Total revenues $ 808.9 $ 1,035.4 $ 1,747.0 $ 2,042.7



Operating earnings:

Commercial & $ 22.9 $ 48.9 $ 54.4 $ 95.4 Industrial Group

Snap-on Tools 38.4 71.3 87.0 138.5 Group

Repair Systems & 50.6 88.6 127.9 172.2 Information Group

Financial Services 57.6 60.6 114.5 122.7

Segment operating 169.5 269.4 383.8 528.8 earnings

Corporate (20.8 ) (18.9 ) (39.3 ) (28.8 )

Operating earnings 148.7 250.5 344.5 500.0

Interest expense (13.4 ) (12.4 ) (24.8 ) (24.9 )

Other income 2.0 2.1 3.5 3.6 (expense) - net

Earnings beforeincome taxes and $ 137.3 $ 240.2 $ 323.2 $ 478.7 equity earnings

SNAP-ON INCORPORATED

Condensed Consolidated Balance Sheets

(Amounts in millions)

(unaudited)

June 27, December 28,

2020 2019

Assets

Cash and cash equivalents $ 686.2 $ 184.5

Trade and other accounts receivable - net 563.5 694.6

Finance receivables - net 508.5 530.1

Contract receivables - net 97.7 100.7

Inventories - net 784.0 760.4

Prepaid expenses and other assets 132.5 110.2

Total current assets 2,772.4 2,380.5



Property and equipment - net 509.4 521.5

Operating lease right-of-use assets 50.2 55.6

Deferred income tax assets 47.1 52.3

Long-term finance receivables - net 1,140.3 1,103.5

Long-term contract receivables - net 366.9 360.1

Goodwill 924.5 913.8

Other intangibles - net 241.0 243.9

Other assets 61.7 62.3

Total assets $ 6,113.5 $ 5,693.5



Liabilities and Equity

Notes payable $ 12.1 $ 202.9

Accounts payable 186.2 198.5

Accrued benefits 48.5 53.3

Accrued compensation 63.9 53.9

Franchisee deposits 83.3 68.2

Other accrued liabilities 435.4 370.8

Total current liabilities 829.4 947.6



Long-term debt 1,436.7 946.9

Deferred income tax liabilities 67.5 69.3

Retiree health care benefits 32.2 33.6

Pension liabilities 109.0 122.1

Operating lease liabilities 33.4 37.5

Other long-term liabilities 96.7 105.7

Total liabilities 2,604.9 2,262.7



Equity

Shareholders' equity attributable to Snap-on Inc.

Common stock 67.4 67.4

Additional paid-in capital 383.1 379.1

Retained earnings 4,894.2 4,779.7

Accumulated other comprehensive loss (514.4 ) (507.9 )

Treasury stock at cost (1,343.6 ) (1,309.2 )

Total shareholders' equity attributable to Snap-on 3,486.7 3,409.1 Inc.

Noncontrolling interests 21.9 21.7

Total equity 3,508.6 3,430.8

Total liabilities and equity $ 6,113.5 $ 5,693.5

SNAP-ON INCORPORATED

Condensed Consolidated Statements of Cash Flows

(Amounts in millions)

(unaudited)

Three Months Ended

June 27, June 29,

2020 2019

Operating activities:

Net earnings $ 105.9 $ 184.9

Adjustments to reconcile net earnings to net cash provided (used) by operating activities:

Depreciation 18.1 17.6

Amortization of other intangibles 5.7 5.4

Provision for losses on finance receivables 15.1 11.9

Provision for losses on non-finance receivables 6.7 3.7

Stock-based compensation expense 5.8 6.8

Deferred income tax provision 1.7 7.0

Loss on sales of assets 0.1 0.3

Settlement of treasury lock 1.4 -

Changes in operating assets and liabilities, net of effects of acquisitions:

Trade and other accounts receivable 78.2 (10.9 )

Contract receivables (13.0 ) (3.1 )

Inventories (8.2 ) (19.6 )

Prepaid and other assets (21.3 ) (7.3 )

Accounts payable (10.0 ) 14.8

Accruals and other liabilities 67.4 (66.0 )

Net cash provided by operating activities 253.6 145.5



Investing activities:

Additions to finance receivables (201.8 ) (220.6 )

Collections of finance receivables 166.8 191.6

Capital expenditures (11.8 ) (28.0 )

Acquisitions of businesses, net of cash acquired - (8.0 )

Disposals of property and equipment 0.9 0.2

Other 0.3 (0.4 )

Net cash used by investing activities (45.6 ) (65.2 )



Financing activities:

Proceeds from issuance of long-term debt 489.9 -

Net increase (decrease) in other short-term (148.1 ) 25.6 borrowings

Cash dividends paid (58.7 ) (52.5 )

Purchases of treasury stock - (60.1 )

Proceeds from stock purchase and option plans 12.3 19.8

Other (5.9 ) (5.9 )

Net cash provided (used) by financing activities 289.5 (73.1 )



Effect of exchange rate changes on cash and cash 2.9 0.4 equivalents

Increase in cash and cash equivalents 500.4 7.6



Cash and cash equivalents at beginning of period 185.8 156.4

Cash and cash equivalents at end of period $ 686.2 $ 164.0



Supplemental cash flow disclosures:

Cash paid for interest $ (0.9 ) $ (1.8 )

Net cash paid for income taxes (12.3 ) (73.8 )



SNAP-ON INCORPORATED

Condensed Consolidated Statements of Cash Flows

(Amounts in millions)

(unaudited)

Six Months Ended

June 27, June 29,

2020 2019

Operating activities:

Net earnings $ 247.9 $ 367.0

Adjustments to reconcile net earnings to net cash provided (used) by operating activities:

Depreciation 36.2 34.8

Amortization of other intangibles 11.4 10.8

Provision for losses on finance receivables 31.4 24.4

Provision for losses on non-finance receivables 11.7 8.7

Stock-based compensation expense 6.9 14.1

Deferred income tax provision (benefit) (1.9 ) 12.4

Loss on sales of assets 0.2 0.6

Settlement of treasury lock 1.4 -

Changes in operating assets and liabilities, net of effects of acquisitions:

Trade and other accounts receivable 112.5 3.9

Contract receivables (11.8 ) 3.0

Inventories (32.0 ) (52.8 )

Prepaid and other assets (18.1 ) (27.0 )

Accounts payable (8.1 ) 16.6

Accruals and other liabilities 79.3 (69.7 )

Net cash provided by operating activities 467.0 346.8



Investing activities:

Additions to finance receivables (414.6 ) (431.1 )

Collections of finance receivables 357.5 383.5

Capital expenditures (29.0 ) (48.2 )

Acquisitions of businesses, net of cash acquired (6.1 ) (9.3 )

Disposals of property and equipment 0.9 0.4

Other (4.1 ) 0.8

Net cash used by investing activities (95.4 ) (103.9 )



Financing activities:

Proceeds from issuance of long-term debt 489.9 -

Net decrease in other short-term borrowings (190.0 ) (18.2 )

Cash dividends paid (117.7 ) (105.3 )

Purchases of treasury stock (50.5 ) (107.5 )

Proceeds from stock purchase and option plans 13.8 24.6

Other (13.1 ) (14.3 )

Net cash provided (used) by financing activities 132.4 (220.7 )



Effect of exchange rate changes on cash and cash (2.3 ) 0.9 equivalents

Increase in cash and cash equivalents 501.7 23.1



Cash and cash equivalents at beginning of year 184.5 140.9

Cash and cash equivalents at end of period $ 686.2 $ 164.0



Supplemental cash flow disclosures:

Cash paid for interest $ (21.6 ) $ (23.4 )

Net cash paid for income taxes (27.4 ) (92.2 )

Non-GAAP Supplemental Data

The following non-GAAP supplemental data is presented for informational purposes to provide readers with insight into the information used by management for assessing the operating performance of Snap-on Incorporated's ("Snap-on") non-financial services ("Operations") and "Financial Services" businesses.

The supplemental Operations data reflects the results of operations and financial position of Snap-on's tools, diagnostic and equipment products, software and other non-financial services operations with Financial Services on the equity method. The supplemental Financial Services data reflects the results of operations and financial position of Snap-on's U.S. and international financial services operations. The financing needs of Financial Services are met through intersegment borrowings and cash generated from Operations; Financial Services is charged interest expense on intersegment borrowings at market rates. Income taxes are charged to Financial Services on the basis of the specific tax attributes generated by the U.S. and international financial services businesses. Transactions between the Operations and Financial Services businesses were eliminated to arrive at the Condensed Consolidated Financial Statements.

SNAP-ON INCORPORATED

Non-GAAP Supplemental Consolidating Data - Supplemental Condensed Statements ofEarnings

(Amounts in millions)

(unaudited)

Operations* Financial Services

Three Months Ended Three Months Ended

June 27, June 29, June 27, June 29,

2020 2019 2020 2019



Net sales $ 724.3 $ 951.3 $ - $ -

Cost of goods sold (383.1 ) (477.5 ) - -

Gross profit 341.2 473.8 - -

Operating expenses (250.1 ) (283.9 ) - -

Operating earnings before 91.1 189.9 - - financial services



Financial services revenue - - 84.6 84.1

Financial services - - (27.0 ) (23.5 ) expenses

Operating earnings from - - 57.6 60.6 financial services



Operating earnings 91.1 189.9 57.6 60.6

Interest expense (13.4 ) (12.3 ) - (0.1 )

Intersegment interest 16.5 17.8 (16.5 ) (17.8 ) income (expense) - net

Other income (expense) - 2.0 2.1 - - net

Earnings before income 96.2 197.5 41.1 42.7 taxes and equity earnings

Income tax expense (21.3 ) (44.5 ) (10.6 ) (11.1 )

Earnings before equity 74.9 153.0 30.5 31.6 earnings

Financial services - netearnings attributable to 30.5 31.6 - - Snap-on

Equity earnings, net of 0.5 0.3 - - tax

Net earnings 105.9 184.9 30.5 31.6

Net earnings attributableto noncontrolling (4.7 ) (4.5 ) - - interests

Net earnings attributable $ 101.2 $ 180.4 $ 30.5 $ 31.6 to Snap-on



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

SNAP-ON INCORPORATED

Non-GAAP Supplemental Consolidating Data - Supplemental Condensed Statements ofEarnings

(Amounts in millions)

(unaudited)

Operations* Financial Services

Six Months Ended Six Months Ended

June 27, June 29, June 27, June 29,

2020 2019 2020 2019



Net sales $ 1,576.5 $ 1,873.0 $ - $ -

Cost of goods sold (813.7 ) (927.6 ) - -

Gross profit 762.8 945.4 - -

Operating expenses (532.8 ) (568.1 ) - -

Operating earningsbefore financial 230.0 377.3 - - services



Financial services - - 170.5 169.7 revenue

Financial services - - (56.0 ) (47.0 ) expenses

Operating earningsfrom financial - - 114.5 122.7 services



Operating earnings 230.0 377.3 114.5 122.7

Interest expense (24.7 ) (24.8 ) (0.1 ) (0.1 )

Intersegment interest 34.6 35.5 (34.6 ) (35.5 ) income (expense) - net

Other income (expense) 3.5 3.6 - - - net

Earnings before incometaxes and equity 243.4 391.6 79.8 87.1 earnings

Income tax expense (55.1 ) (89.9 ) (20.7 ) (22.6 )

Earnings before equity 188.3 301.7 59.1 64.5 earnings

Financial services -net earnings 59.1 64.5 - - attributable toSnap-on

Equity earnings, net 0.5 0.8 - - of tax

Net earnings 247.9 367.0 59.1 64.5

Net earningsattributable to (9.5 ) (8.7 ) - - noncontrollinginterests

Net earningsattributable to $ 238.4 $ 358.3 $ 59.1 $ 64.5 Snap-on



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

SNAP-ON INCORPORATED

Non-GAAP Supplemental Consolidating Data - Supplemental Condensed BalanceSheets

(Amounts in millions)

(unaudited)

Operations* Financial Services

June 27, December June 27, December 28, 28,

2020 2019 2020 2019

Assets

Cash and cash $ 685.9 $ 184.4 $ 0.3 $ 0.1 equivalents

Intersegment receivables 13.6 14.2 - -

Trade and other accounts 562.7 693.5 0.8 1.1 receivable - net

Finance receivables - - - 508.5 530.1 net

Contract receivables - 7.0 6.8 90.7 93.9 net

Inventories - net 784.0 760.4 - -

Prepaid expenses and 132.3 111.8 9.2 7.0 other assets

Total current assets 2,185.5 1,771.1 609.5 632.2



Property and equipment - 507.8 519.8 1.6 1.7 net

Operating lease 47.7 52.9 2.5 2.7 right-of-use assets

Investment in Financial 340.9 340.5 - - Services

Deferred income tax 24.6 32.7 22.5 19.6 assets

Intersegment long-term 267.8 755.5 - - notes receivable

Long-term finance - - 1,140.3 1,103.5 receivables - net

Long-term contract 14.3 16.0 352.6 344.1 receivables - net

Goodwill 924.5 913.8 - -

Other intangibles - net 241.0 243.9 - -

Other assets 73.5 73.0 0.2 0.2

Total assets $ 4,627.6 $ 4,719.2 $ 2,129.2 $ 2,104.0



Liabilities and Equity

Notes payable $ 12.1 $ 202.9 $ - $ -

Accounts payable 184.7 197.3 1.5 1.2

Intersegment payables - - 13.6 14.2

Accrued benefits 48.5 53.2 - 0.1

Accrued compensation 61.1 52.2 2.8 1.7

Franchisee deposits 83.3 68.2 - -

Other accrued 396.7 353.7 47.7 25.7 liabilities

Total current 786.4 927.5 65.6 42.9 liabilities



Long-term debt andintersegment long-term - - 1,704.5 1,702.4 debt

Deferred income tax 67.5 69.3 - - liabilities

Retiree health care 32.2 33.6 - - benefits

Pension liabilities 109.0 122.1 - -

Operating lease 30.7 34.5 2.7 3.0 liabilities

Other long-term 93.2 101.4 15.5 15.2 liabilities

Total liabilities 1,119.0 1,288.4 1,788.3 1,763.5



Total shareholders'equity attributable to 3,486.7 3,409.1 340.9 340.5 Snap-on

Noncontrolling interests 21.9 21.7 - -

Total equity 3,508.6 3,430.8 340.9 340.5

Total liabilities and $ 4,627.6 $ 4,719.2 $ 2,129.2 $ 2,104.0 equity



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

SNAP-ON INCORPORATED

Reconciliation of Non-GAAP Financial Measures

(Amounts in millions, except per share data)

(unaudited)

Three Months Ended Six Months Ended

June 27, June 29, June 27, June 29,

2020 2019 2020 2019

AS REPORTED



Charges associated withexit and disposalactivities ("restructuringcharges")

Pre-tax restructuring $ (4.0 ) $ - $ (11.5 ) $ - charges

Income tax benefits 0.7 - 2.2 -

Restructuring charges, $ (3.3 ) $ - $ (9.3 ) $ - after tax



Weighted-average shares 54.8 56.0 54.9 56.2 outstanding - diluted



Diluted EPS - $ (0.06 ) $ - $ (0.17 ) $ - restructuring charges



Benefit related to thesettlement of a litigation matter("legal settlement")

Pre-tax legal settlement $ - $ - $ - $ 11.6

Income tax expense - - - (2.9 )

Legal settlement, after $ - $ - $ - $ 8.7 tax



Weighted-average shares 54.8 56.0 54.9 56.2 outstanding - diluted



Diluted EPS - legal $ - $ - $ - $ 0.15 settlement



ADJUSTED INFORMATION - NON-GAAP



1) Operating earningsbefore financial services

As reported $ 91.1 $ 189.9 $ 230.0 $ 377.3

Restructuring charges 4.0 - 11.5 -

Legal settlement - - - (11.6 )

As adjusted $ 95.1 $ 189.9 $ 241.5 $ 365.7



Operating earningsbefore financial services as a percentageof sales

As reported 12.6 % 20.0 % 14.6 % 20.1 %

As adjusted 13.1 % 20.0 % 15.3 % 19.5 %



2) Operating earnings

As reported $ 148.7 $ 250.5 $ 344.5 $ 500.0

Restructuring charges 4.0 - 11.5 -

Legal settlement - - - (11.6 )

As adjusted $ 152.7 $ 250.5 $ 356.0 $ 488.4



Operating earnings as a percentage of revenue

As reported 18.4 % 24.2 % 19.7 % 24.5 %

As adjusted 18.9 % 24.2 % 20.4 % 23.9 %

SNAP-ON INCORPORATED

Reconciliation of Non-GAAP Financial Measures (continued)

(Amounts in millions, except per share data)

(unaudited)

Three Months Ended Six Months Ended

June 27, June 29, June 27, June 29,

2020 2019 2020 2019

ADJUSTED INFORMATION - NON-GAAP (continued)



3) Net earningsattributable to Snap-on Incorporated

As reported $ 101.2 $ 180.4 $ 238.4 $ 358.3

Restructuring charges, 3.3 - 9.3 - after tax

Legal settlement, after - - - (8.7 ) tax

As adjusted $ 104.5 $ 180.4 $ 247.7 $ 349.6



4) Diluted EPS

As reported $ 1.85 $ 3.22 $ 4.34 $ 6.38

Restructuring charges, 0.06 - 0.17 - after tax

Legal settlement, after - - - (0.15 ) tax

As adjusted $ 1.91 $ 3.22 $ 4.51 $ 6.23



5) Effective tax rate

As reported 24.1 % 23.6 % 24.2 % 23.9 %

Restructuring charges (0.2 ) % - % (0.2 ) % - %

As adjusted 23.9 % 23.6 % 24.0 % 23.9 %

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CONTACT: For additional information, please visitwww.snapon.comor contact: Investors: Sara Verbsky 262/656-4869

CONTACT: Media: Samuel Bottum 262/656-5793