Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management Overview
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 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 targeting places where tasks require repeatability and reliability, building a deep understanding of the work, and providing specialized productivity solutions for critical activities; and
•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 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. Savings from Snap-on’s RCI initiatives reflect benefits from a wide variety of ongoing efficiency, productivity and process improvements, including savings generated from product design cost reductions, improved manufacturing line set-up and change-over practices, lower-cost sourcing initiatives and facility consolidations. Unless individually significant, it is not practicable to disclose each RCI activity that generated savings and/or segregate RCI savings embedded in sales volume increases.
Our global financial services operations continue to serve a significant strategic role in offering financing options to our franchisees, to their customers, and to customers in other parts of our business. We expect that our global financial services business, which includes both Snap-on Credit LLC (“SOC”) in the United States and our other international finance subsidiaries, will continue to be a meaningful contributor to our operating earnings going forward.
Snap-on has significant international operations and is subject to risks inherent with foreign operations, including foreign currency translation fluctuations.
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Fiscal Year
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 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 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
A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 can be found under “Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on the Form 10-K for the fiscal year ended December 28, 2024, which was filed with the SEC on February 13, 2025, and is available on the SEC’s website at www.sec.gov as well as in the “Investors” section of our website at www.snapon.com.
Non-GAAP Measures
References in Management’s Discussion and Analysis of Financial Condition and Results of Operations to “organic sales” refer to sales from continuing operations calculated in accordance with GAAP, adjusted to exclude acquisition-related sales and the impact of foreign currency translation. Management evaluates the company’s sales performance based on organic sales growth, which primarily reflects growth from the company’s existing businesses as a result of increased output, expanded customer base, geographic expansion, new product development and pricing changes, and excludes sales contributions from acquired operations the company did not own as of the comparable prior-year reporting period. Organic sales 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 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 $4,743.2 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.
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 $1,016.9 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 $1,457.5 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:
•Expanding our business with existing customers and reaching new customers in critical industries and other market segments;
•Leveraging our investments in emerging markets to support growth initiatives;
•Broadening our product offering designed particularly for critical industry segments;
•Increasing our customer-connection-driven understanding of work across multiple industries;
•Investing in innovation that, guided by that understanding of work, delivers an ongoing stream of productivity-enhancing custom-engineered solutions; and
•Continuing to reduce structural and operating costs, as well as improve efficiencies, through RCI initiatives.
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 $1,964.9 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 operating 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:
•Enhancing franchisee sales productivity, profitability, commercial health, and satisfaction;
•Developing new programs and products to match current technician preferences, reaching new customers and increasing penetration with existing customers;
•Expanding investment in new product innovation and development; and
•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 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 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.
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The Repair Systems & Information Group intends to focus on the following strategic priorities in 2026:
•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, including using artificial intelligence (“AI”) to accelerate expansion in that arena;
•Advancing productivity through RCI initiatives and the optimization of resources; and
•Increasing geographic penetration, including in emerging markets.
Financial Services generates revenue from various financing programs and is a strategic partner of the company’s mobile franchise van channel. Financial services revenue of $412.9 million in 2025 compared to $401.0 million in 2024. Originations of $1,120.9 million in 2025 represented a decrease of $62.0 million, or 5.2%, from 2024 levels. Operating earnings from financial services of $281.8 million in 2025 compared to $276.9 million last year.
Financial Services intends to focus on the following strategic priorities in 2026:
•Delivering financial products and services that attract and sustain profitable franchisees and support Snap‐on’s strategies for expanding market coverage and penetration;
•Improving productivity levels and ensuring high quality in all financial products and processes through the use of RCI initiatives; and
•Maintaining healthy portfolio performance levels.
Cash Flows
Net cash provided by operating activities of $1,081.7 million in 2025 compared to $1,217.5 million in 2024. 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 $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 $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. 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.
Results of Operations
2025 vs. 2024
Results of operations for 2025 and 2024 are as follows:
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.
Financial services revenue of $412.9 million in 2025 compared to $401.0 million last year. Financial services operating earnings of $281.8 million in 2025 compared to $276.9 million in 2024.
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 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.
The effective income tax rate on earnings attributable to Snap-on was 22.4% in 2025 and 22.6% in 2024. 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, 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: (i) the Commercial & Industrial Group; (ii) the Snap-on Tools Group; (iii) the Repair Systems & Information Group; and (iv) Financial Services. 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, primarily through direct and distributor channels. 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. 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 dealerships, through direct and distributor channels. Financial Services consists of the business operations of Snap-on’s finance subsidiaries.
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. The Financial Services operating segment is evaluated based on financial services revenue and segment operating earnings. Corporate expenses primarily reflect stock-based compensation and other costs not attributable to an operating segment. Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.
Commercial & Industrial Group
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 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.
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.
Snap-on Tools Group
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.
Repair Systems & Information Group
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 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.
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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
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 $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. Originations of $1,120.9 million in 2025 represented a decrease of $62.0 million, or 5.2%, from 2024 levels.
Financial services expenses primarily include personnel-related and other general and administrative costs, as well as provisions for credit losses. 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 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 $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.
Corporate
Snap-on’s general corporate expenses in 2025 of $99.4 million compared to $75.8 million recorded in 2024. The year-over-year increase primarily reflects the benefits from the legal payments received in 2024.
Quarterly Data
FirstQuarter SecondQuarter ThirdQuarter FourthQuarter Total
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Fourth Quarter
Results of operations for the fourth quarters of 2025 and 2024 are as follows:
Fourth Quarter
Operating earnings before financial services 265.2 21.5 % 265.2 22.1 % — — %
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 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.
Financial services revenue of $108.0 million in the fourth quarter of 2025 compared to $100.5 million last year. Financial services operating earnings of $74.4 million in the period compared to $66.7 million in 2024.
Operating earnings of $339.6 million in the fourth quarter of 2025 compared to $331.9 million in 2024. 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 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.
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.
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.
Segment Results
Commercial & Industrial Group
Fourth Quarter
Segment net sales of $398.1 million in the fourth quarter of 2025 represented an increase of $18.9 million, or 5.0%, from 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.
Snap-on Tools Group
Fourth Quarter
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 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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Repair Systems & Information Group
Fourth Quarter
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.
Financial Services
Fourth Quarter
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 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.
Corporate
Snap-on’s fourth quarter 2025 general corporate expenses of $20.4 million compared to $26.6 million last year. The year-over-year decrease primarily reflects lower performance-based compensation and other costs.
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’s 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, diagnostics, equipment products, software, and other non-financial services operations with Financial Services presented 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 are eliminated to arrive at the Consolidated Financial Statements.
Non-GAAP Supplemental Consolidating Data – Supplemental Statements of Earnings information for 2025 and 2024 is as follows:
Operations* Financial Services
Operating earnings before financial services 1,045.9 1,068.8 — —
Financial services revenue — — 412.9 401.0
Financial services expenses — — (131.1) (124.1)
Operating earnings from financial services — — 281.8 276.9
Interest expense (50.5) (49.6) — —
Intersegment interest income (expense) – net 69.1 67.1 (69.1) (67.1)
Net earnings attributable to noncontrolling interests (25.4) (25.0) — —
* Snap-on with Financial Services presented on the equity method.
40 SNAP-ON INCORPORATED
Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheets Information as of 2025 and 2024 year end is as follows:
Operations* Financial Services
ASSETS
Current assets:
Intersegment receivables 20.3 15.1 — —
Trade and other accounts receivable – net 880.2 815.0 1.2 0.6
Finance receivables – net — — 590.2 610.3
Operating lease right-of-use assets 78.4 83.8 5.3 5.6
Investment in Financial Services 400.3 403.5 — —
Intersegment long-term notes receivable 815.0 831.8 — —
Long-term finance receivables – net — — 1,298.8 1,312.0
Other intangible assets – net 270.7 267.6 — —
* Snap-on with Financial Services presented on the equity method.
Non-GAAP Supplemental Consolidating Data – Supplemental Balance Sheets Information (continued):
Operations* Financial Services
LIABILITIES AND EQUITY
Current liabilities:
Notes payable $ 16.2 $ 13.7 $ — $ —
Intersegment payables — — 20.3 15.1
Franchisee deposits 66.2 70.9 — —
Long-term debt and intersegment long-term debt — — 2,001.4 2,017.3
Deferred income tax liabilities 87.0 73.5 — —
Retiree health care benefits 17.7 19.4 — —
Pension liabilities 85.7 78.4 — —
Noncontrolling interests 25.0 22.9 — —
* Snap-on with Financial Services presented on the equity method.
42 SNAP-ON INCORPORATED
Liquidity and Capital Resources
Snap-on’s growth has historically been funded by a combination of cash provided by operating activities and debt financing. Snap-on believes that its cash from operations and collections of finance receivables, coupled with its sources of borrowings and available cash on hand, are sufficient to fund its currently anticipated requirements for scheduled debt repayments, payments of interest and dividends, new receivables originated by our financial services businesses, capital expenditures, working capital, funding of pension plans, and share repurchases and acquisitions, if and as they arise.
Due to Snap-on’s credit rating over the years, external funds have been available at an acceptable cost. As of February 6, 2026, Snap-on’s long-term debt and commercial paper were rated, respectively: A2 and P-1 by Moody’s Investors Service; A- and A-2 by Standard & Poor’s; and A and F1 by Fitch Ratings. Snap-on believes that its current credit arrangements are sound and that the strength of its balance sheet affords the company the financial flexibility, including through access to financial markets for potential new financing, to respond to both internal growth opportunities and those available through acquisitions. However, Snap-on cannot provide any assurance that financing will be available in the future on acceptable terms, or that its debt ratings will not decrease.
The following discussion focuses on information included in the accompanying Consolidated Balance Sheets.
As of 2025 year end, working capital (current assets less current liabilities) of $3,484.3 million represented an increase of $456.4 million from $3,027.9 million as of 2024 year end primarily as a result of the net changes in working capital discussed below.
The following represents the company’s working capital position as of 2025 and 2024 year end:
Trade and other accounts receivable – net 881.4 815.6
Prepaid expenses and other current assets 151.5 139.6
Other current liabilities (673.2) (681.9)
Total current liabilities (918.5) (961.5)
Cash and cash equivalents of $1,624.5 million as of 2025 year end represented an increase of $264.0 million from 2024 year-end levels primarily due to: (i) $1,081.7 million of cash generated from operations; (ii) $888.9 million of cash from collections of finance receivables; and (iii) $73.9 million of cash proceeds from stock purchase plans and stock option exercises. These increases in cash and cash equivalents were partially offset by: (i) the funding of $913.6 million of new finance receivables; (ii) dividend payments to shareholders of $462.2 million; (iii) the repurchase of 987,000 shares of the company’s common stock for $328.6 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. Snap-on maintains non-U.S. funds in its foreign operations to: (i) provide adequate working capital; (ii) satisfy various regulatory requirements; and/or (iii) take advantage of business expansion opportunities as they arise. Although the Tax Cuts and Jobs Act (“Tax Act”) generally eliminated U.S. federal taxation of dividends from foreign subsidiaries, such dividends may still be subject to state income taxation and foreign withholding taxes. Snap-on periodically evaluates its cash held outside the United States and may pursue opportunities to repatriate certain foreign cash amounts to the extent that it can be accomplished in a tax efficient manner.
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.
The current portions of net finance and contract receivables of $720.2 million as of 2025 year end compared to $730.3 million at 2024 year end. 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.
Inventories – net of $1,025.2 million as of 2025 year end increased $81.8 million from 2024 year-end levels primarily 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 as 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. All other inventories are accounted for using the last-in, first-out (“LIFO”) method. The company’s LIFO reserve was $126.7 million and $122.4 million at 2025 and 2024 year end, respectively.
Notes payable of $16.2 million as of 2025 year end compared to $13.7 million as of 2024 year end. Average notes payable outstanding were $18.0 million and $14.9 million in 2025 and 2024, respectively. The 2025 weighted-average interest rate on such borrowings of 13.4% compared with 10.4% in 2024. At 2025 year end, the weighted-average rate on outstanding notes payable of 15.6% compared with 9.5% in 2024.
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.
Long-term debt of $1,186.4 million as of 2025 year end consisted of: (i) $300.0 million of unsecured 3.25% notes that mature on March 1, 2027 (the “2027 Notes”); (ii) $400.0 million of unsecured 4.10% notes that mature on March 1, 2048 (“the 2048 Notes”); and (iii) $500.0 million of 3.10% notes that mature on May 1, 2050 (the “2050 Notes”), partially offset by $13.6 million of unamortized debt issuance costs and issuance discounts.
Snap-on has a $900 million multicurrency revolving credit facility that terminates on September 12, 2028 (the “Credit Facility”). The Credit Facility contains an accordion feature that, subject to certain customary conditions, may allow the maximum commitment to be increased by up to $450 million with the approval of the lenders providing additional commitments. No amounts were borrowed or outstanding under 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: (i) Snap-on’s then-current, long-term debt ratings; or (ii) Snap-on’s then-current ratio of consolidated debt net of certain cash adjustments (“Consolidated Net Debt”) to earnings before interest, taxes, depreciation, amortization and certain other adjustments for the preceding four fiscal quarters then ended (the “Consolidated Net Debt to EBITDA Ratio”). The Credit Facility’s financial covenant requires that Snap-on maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of Consolidated Net Debt to the sum of Consolidated Net Debt plus total equity and less accumulated other comprehensive income or loss (the “Leverage Ratio”); or (ii) a Consolidated Net Debt to EBITDA Ratio not greater than 3.50 to 1.00. 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 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 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.
44 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. Snap-on manages its aggregate short-term borrowings so as not to exceed its availability under the Credit Facility. Snap-on believes that it can access short-term debt markets, predominantly through commercial paper issuances and existing lines of credit, to fund its short-term requirements and to ensure near-term liquidity. Snap-on regularly monitors the credit and financial markets and, if it believes conditions are favorable, it may take advantage of such conditions to issue long-term debt to further improve its liquidity and capital resources. Near-term liquidity requirements for Snap-on include payments of interest and dividends, funding to support new receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise. Snap-on 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 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.
The following discussion focuses on information included in the accompanying Consolidated Statements of Cash Flows.
Operating Activities
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. Amortization expense was $22.7 million in 2025 and $25.3 million in 2024. See Note 6 and Note 7 to the Consolidated Financial Statements for information on property and equipment and goodwill and other intangible assets.
Investing Activities
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.
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 Value Creation Processes. The company also invested in: (i) new product, efficiency, safety and cost reduction initiatives that are intended to expand and improve its manufacturing and distribution capabilities worldwide; (ii) new production and machine tooling to enhance manufacturing operations, as well as ongoing replacements of manufacturing and distribution equipment, particularly in the United States; and (iii) the ongoing enhancement of the company’s global enterprise resource planning (ERP) management information systems. Snap-on believes that its cash generated from operations, as well as its available cash on hand and funds available from its credit facilities will be sufficient to fund the company’s capital expenditure requirements in 2026.
Financing Activities
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. In 2025, Snap-on repurchased 987,000 shares of its common stock for $328.6 million under its previously announced share repurchase programs. Snap-on repurchased 952,000 shares of its common stock for $290.0 million in 2024. As of 2025 year end, Snap-on had remaining availability to repurchase up to an additional $260.0 million in common stock pursuant to its Board’s authorizations. The repurchase of Snap-on common stock to offset dilution related to equity plan issuances or for other corporate purposes is at the company’s discretion, subject to prevailing financial and market conditions. Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to fund the company’s additional share repurchases, if any.
Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. Cash dividends paid in 2025 and 2024 totaled $462.2 million and $406.4 million, respectively. On November 6, 2025, the company announced that its Board increased the quarterly cash dividend by 14.0% to $2.44 per share ($9.76 per share annualized). 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).
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).
Cash dividends paid per common share $ 8.86 $ 7.72
Cash dividends paid as a percentage of prior-year retained earnings 6.1 % 5.8 %
Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to pay dividends in 2026.
Contractual Obligations and Commitments
Snap-on’s contractual obligations for long-term debt and operating and finance leases are reflected in the Consolidated Balance Sheets; see Note 9 and Note 16 to the Consolidated Financial Statements for information on the company’s long-term debt and leases. Snap-on also enters into contracts for future purchases in the normal course of business. As of year-end 2025, the company had $180.3 million in purchase commitments to be paid in 2026 and $6.5 million to be paid thereafter.
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 additional discretionary cash contributions to its pension plans in 2026; see Note 11 and Note 12 to the Consolidated Financial Statements for information on the company’s benefit plans and payments.
Due to the uncertainty of the timing of settlements with taxing authorities, Snap-on is unable to make reasonably reliable estimates of the period of cash settlement of unrecognized tax benefits totaling $7.4 million for its remaining uncertain tax liabilities. See Note 8 to the Consolidated Financial Statements for information on income taxes.
Environmental Matters
Snap-on is subject to various federal, state and local government requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. Snap-on’s policy is to comply with these requirements and the company believes that, as a general matter, its policies, practices and procedures are properly designed to prevent unreasonable risk of environmental damage, and of resulting financial liability, in connection with its business. Some risk of environmental damage is, however, inherent in some of Snap-on’s operations and products, as it is with other companies engaged in similar businesses.
Snap-on is and has been engaged in the handling, manufacture, use and disposal of many substances classified as hazardous or toxic by one or more regulatory agencies. Snap-on believes that, as a general matter, its handling, manufacture, use and disposal of these substances are in accordance with environmental laws and regulations. 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.
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.
New Accounting Standards
See Note 1 to the Consolidated Financial Statements for information on new accounting standards.
46 SNAP-ON INCORPORATED
Critical Accounting Policies and Estimates
The Consolidated Financial Statements and related notes contain information that is pertinent to management’s discussion and analysis. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates are generally based on historical experience, current conditions and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources, as well as identifying and assessing our accounting treatment with respect to commitments and contingencies. Actual results could differ from those estimates.
In addition to the company’s significant accounting policies described in Note 1 to the Consolidated Financial Statements, Snap-on considers the following policies and estimates to be the most critical in understanding the judgments that are involved in the preparation of the company’s consolidated financial statements and the uncertainties that could impact the company’s financial position, results of operations and cash flows.
Allowance for Credit Losses on Finance Receivables: 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 expectations. 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 provisions 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 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 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 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.
Impairment of Goodwill: Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. Annual impairment tests are performed by the company in the second quarter of each year using information available as of April month end.
Snap-on evaluates the recoverability of goodwill by estimating the future discounted cash flows of the businesses to which the goodwill relates. Estimated cash flows and related goodwill are grouped at the reporting unit level. The company has determined that its reporting units for testing goodwill impairment are its operating segments or components of an operating segment that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results. Within its four reportable operating segments, the company has identified 11 reporting units.
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. The future projections, which are based on both past performance and the projections and assumptions used in the company’s operating plans, are subject to change as a result of changing economic and competitive conditions. This approach reflects management’s internal outlook at the reporting units, which management believes provides the best determination of value due to management’s insight and experience with the reporting units. Significant estimates used by management in the discounted cash flows methodology include estimates of future cash flows based on expected growth rates, price increases, working capital levels, expected benefits from RCI initiatives, and a weighted-average cost of capital that reflects the risk profile of the reporting unit being tested. The company’s methodologies for valuing goodwill are applied consistently on a year-over-year basis; the assumptions used in performing the second quarter 2025 impairment calculations were evaluated in light of then-current market and business conditions. Snap-on continues to believe that the future discounted cash flow valuation model provides the most reasonable and meaningful fair value estimate based upon the reporting units’ projections of future operating results and cash flows and replicates how market participants would value the company’s reporting units in an orderly transaction.
In the event the fair value of a reporting unit is less than the carrying value, including goodwill, the company would then record an impairment charge based on the excess of a reporting units carrying amount over its fair value.
Inherent in fair value determinations are significant judgments and estimates, including material assumptions about future revenue, profitability and cash flows, the company’s operational plans and its interpretation of current economic indicators. Should the operations of the businesses with which goodwill is associated incur significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to long-term deterioration in macroeconomic, industry and market conditions, the loss of key customers, changes in technology or markets, changes in key personnel or litigation, a sustained decrease in share price and/or other events, some or all of the recorded goodwill could be subject to impairment and could result in a material adverse effect on Snap-on’s financial position or results of operations.
Snap-on completed its annual impairment testing of goodwill in the second quarter of 2025, the results of which did not result in any impairment. As of 2025 year end, the company has no accumulated impairment losses. Although the company consistently uses the same methods in developing the assumptions and estimates underlying the fair value calculations, such estimates are uncertain by nature and can vary from actual results. In performing its annual impairment testing the company performed a sensitivity analysis on the material assumptions used in the discounted cash flow valuation models for each of its 11 reporting units. Based on the company’s second quarter 2025 impairment testing, and assuming a hypothetical 10% decrease in the estimated fair values of each of its 11 reporting units, the hypothetical fair value of each of the company’s 11 reporting units would have been greater than its carrying value. See Note 7 to the Consolidated Financial Statements for additional information about goodwill.
Pension Benefits: The pension benefit obligation and related pension expense are calculated in accordance with GAAP and are impacted by certain actuarial assumptions. Changes in these assumptions are primarily influenced by factors outside of Snap-on’s control, such as changes in economic conditions, and can have a significant effect on the amounts reported in the financial statements. Snap-on believes that the two most critical assumptions are (i) the expected return on plan assets; and (ii) the assumed discount rate.
Snap-on’s domestic pension plans have a long-term investment horizon and a total return strategy that emphasizes a capital growth objective. In 2025, the long-term investment performance objective for Snap-on’s domestic plans’ assets was to achieve net of expense returns that met or exceeded the 7.5% domestic expected return on plan assets assumption. Snap-on uses a three-year, market-related value asset method of amortizing the difference between actual and expected returns on its domestic plans’ assets. As of 2025 year end, Snap-on’s domestic pension plans’ assets comprised approximately 86% of the company’s worldwide pension plan assets.
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Based on forward-looking capital market expectations, Snap-on selected an expected return on plan assets assumption for its U.S. pension plans of 7.5%, the same rate used in 2025, to be used in determining pension expense for 2026. 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.
Pension expense increases as the expected rate of return on plan assets decreases. Lowering the expected rate of return assumption for Snap-on’s domestic pension plans’ assets by 50 bps would have increased Snap-on’s 2025 domestic pension expense by approximately $5.4 million.
The objective of Snap-on’s discount rate assumption is to reflect the rate at which the pension benefits could be effectively settled. The domestic discount rate as of 2025 and 2024 year end was selected based on a cash flow matching methodology developed by the company’s outside actuaries that incorporates a review of current economic conditions. This methodology matches the plans’ yearly projected cash flows for benefits and service costs to those of hypothetical bond portfolios using high-quality, AA rated or better, corporate bonds from either Moody’s Investors Service or Standard & Poor’s credit rating agencies available at the measurement date. This technique calculates bond portfolios that produce adequate cash flows to pay the plans’ projected yearly benefits and then selects the portfolio with the highest yield and uses that yield as the recommended discount rate.
The selection of the 5.5% weighted-average discount rate for Snap-on’s domestic pension plans as of 2025 year end (compared to 5.6% as of 2024 year end) represents the single rate that produces the same present value of cash flows as the estimated benefit plan payments. Lowering Snap-on’s domestic discount rate assumption by 50 bps would have increased Snap-on’s 2025 domestic pension expense and projected benefit obligation by approximately $2.8 million and $46.2 million, respectively. As of 2025 year end, Snap-on’s domestic projected benefit obligation comprised approximately 85% of Snap-on’s worldwide projected benefit obligation. The weighted-average discount rate for Snap-on’s foreign pension plans of 4.9% (compared to 4.6% as of 2024 year end) represents the single rate that produces the same present value of cash flows as the estimated benefit plan payments. Lowering Snap-on’s foreign discount rate assumption by 50 bps would have increased Snap-on’s 2025 foreign pension expense and projected benefit obligation by approximately $0.7 million and $12.2 million, respectively.
Actuarial gains and losses in excess of 10 percent of the greater of the projected benefit obligation or market-related value of assets are amortized on a straight-line basis over the average remaining service period of active participants or over the average remaining life expectancy for plans with primarily inactive participants. 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 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. To determine the 2026 net periodic benefit cost, Snap-on is using weighted-average discount rates for its domestic and foreign pension plans of 5.5% and 4.9%, respectively, and an expected return on plan assets for its domestic pension plans of 7.5%. The expected returns on plan assets for foreign pension plans ranged from 2.2% to 6.7% as of 2025 year end. See Note 11 to the Consolidated Financial Statements for additional information on pension plans.
Outlook
We believe that our markets and our operations possess and have demonstrated continuing and considerable resilience against the uncertainties of the current environment. 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.
Snap-on currently anticipates that its full-year 2026 effective income tax rate will be in the range of 22% to 23%.
50 SNAP-ON INCORPORATED
Item 7A: Quantitative and Qualitative Disclosures About Market Risk
Market, Credit and Economic Risks
Market risk is the potential economic loss that may result from adverse changes in the fair value of financial instruments. Snap-on is exposed to market risk from changes in interest rates and foreign currency exchange rates. Snap-on is also exposed to market risk associated with the stock-based portion of its deferred compensation plans. Snap-on monitors its exposure to these risks and attempts to manage the underlying economic exposures through the use of financial instruments such as foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements (“equity forwards”). Snap-on does not use derivative instruments for speculative or trading purposes. Snap-on’s broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on its operating earnings as a whole. Snap-on’s management takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in the identification, assessment and control of various risks.
Foreign Currency Risk Management
Snap-on has significant international operations and is subject to certain risks inherent with foreign operations that include currency fluctuations. Foreign currency exchange risk exists to the extent that Snap-on has payment obligations or receipts denominated in currencies other than the functional currency, including intercompany loans denominated in foreign currencies. To manage these exposures, Snap-on identifies naturally offsetting positions and then purchases hedging instruments to protect the residual net exposures. See Note 10 to the Consolidated Financial Statements for information on foreign currency risk management.
Interest Rate Risk Management
Snap-on may manage the exposure created by the differing maturities and interest rate structures of Snap-on’s borrowings through the use of interest rate swap agreements. Treasury lock agreements may be used to manage the potential change in interest rates in anticipation of the issuance of fixed rate debt. See Note 10 to the Consolidated Financial Statements for information on interest rate risk management.
Snap-on utilizes a Value-at-Risk (“VAR”) model to determine the potential one-day loss in the fair value of its interest rate and foreign exchange-sensitive financial instruments from adverse changes in market factors. The VAR model estimates were made assuming normal market conditions and a 95% confidence level. Snap-on’s computations are based on the inter-relationships among movements in various currencies and interest rates (variance/co-variance technique). These inter-relationships were determined by observing interest rate and foreign currency market changes over the preceding quarter.
As of year end 2025 and 2024, the estimated maximum potential net one-day loss in fair value, calculated using the VAR model, was $4.7 million and $9.8 million, respectively. For 2025, the estimated loss consisted entirely of a $4.7 million loss on interest rate-sensitive financial instruments. For 2024, the estimated loss of $9.8 million was comprised of a $10.0 million loss on interest rate-sensitive financial instruments, partially offset by a $0.2 million gain on foreign currency-sensitive financial instruments. The VAR model is a risk management tool and does not purport to represent actual losses in fair value that will be incurred by Snap-on, nor does it consider the potential effect of favorable changes in market factors.
Stock-based Deferred Compensation Risk Management
Snap-on manages market risk associated with the stock-based portion of its deferred compensation plans through the use of equity forwards. Equity forwards are used to aid in offsetting the potential mark-to-market effect on stock-based deferred compensation from changes in Snap-on’s stock price. Since stock-based deferred compensation liabilities increase as the company’s stock price rises and decrease as the company’s stock price declines, the equity forwards are intended to mitigate the potential impact on deferred compensation expense that may result from such mark-to-market changes. See Note 10 to the Consolidated Financial Statements for additional information on stock-based deferred compensation risk management.
Credit Risk
Credit risk is the possibility of loss from a customer’s failure to make payments according to contract terms. Prior to extending credit, each customer is evaluated, taking into consideration various factors, including the customer’s financial condition, past payment experience, credit bureau information, and other financial and qualitative factors that may affect the customer’s ability to repay, as well as the value of the underlying collateral. Finance receivable credit risk is also monitored regularly through the use of internal proprietary custom scoring models to evaluate each transaction at the time of the application for credit. Snap‐on evaluates credit quality through the use of an internal proprietary measuring system that provides a framework to analyze finance receivables on the basis of risk factors of the individual obligor as well as transaction specific risk. The finance receivables are typically monitored through an asset quality review process that closely monitors past due accounts and initiates a progressive collection action process when appropriate.
Counterparty Risk
Snap-on is exposed to credit losses in the event of non-performance by the counterparties to its various financial agreements, including current or future foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements. Snap-on does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of the counterparties and generally enters into agreements with financial institution counterparties with a credit rating of A- or better. Snap-on does not anticipate non-performance by its counterparties, but cannot provide assurances.
Economic Risk
Economic risk is the possibility of loss resulting from economic instability in certain areas of the world. Snap-on continually monitors its exposure in these markets. For example, the company is monitoring the global economic impact of and developments related to the ongoing war in Ukraine and conflicts in other regions. While inflation has become more prevalent in the world economy, Snap‐on has taken steps to control and offset associated cost increases through its supply chain management, pricing actions, and deployment of Rapid Continuous Improvement (“RCI”).
As a result of the above market, credit and economic risks, net earnings and revenues in any particular period may not be representative of full-year results and may vary significantly from year to year.
Commodity Risk
Snap-on is a purchaser of certain commodities such as steel, natural gas and electricity. The company is also a purchaser of components and parts that are integrated into the company’s end products, as well as the purchaser of certain finished goods, all of which may contain various commodities including steel, aluminum, nickel, copper and others. Snap-on’s supply of raw materials and purchased components are generally and readily available from numerous suppliers, and the company continuously works to expand and enhance supplier relationships to meet its supply needs.
The principal raw material used in the manufacture of the company’s products is steel, which the company purchases in competitive, price-sensitive markets. To meet Snap-on’s high quality standards, the company’s steel requirements range from specialized alloys, which are available only from a limited group of approved suppliers, to common alloys, which are available from multiple suppliers. Some of these materials have been, and in the future may be, in short supply, particularly in the event of mill shutdowns or production cut backs, as well as from supply chain disruptions or inefficiencies, some of which may be associated with significant weather or climate-related events. As some steel alloys require specialized manufacturing procedures, Snap-on could experience shortages if it were required to use an alternative manufacturer on short notice. Steel and other raw materials, components and certain finished goods can exhibit price and demand cyclicality, including as a result of tariffs and other trade protection measures. Associated unexpected cost increases could result in an erosion of product margins or require Snap-on to increase prices to customers to maintain margins if other cost reduction efforts do not offset raw material cost increases.
To the extent that commodity prices increase and the company does not have firm pricing agreements with its suppliers, the company may experience margin declines to the extent that it is not able to increase the selling prices of its products or reduce other costs.
52 SNAP-ON INCORPORATED
Item 8: Financial Statements and Supplementary Data
The financial statements and schedules are listed in Part IV, Item 15(a) and are incorporated by reference into this Item 8.
Item 9: Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A: Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Snap-on maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that material information relating to the company and its consolidated subsidiaries is timely communicated to the officers who certify Snap-on’s financial reports and to other members of senior management and the Board, as appropriate.
In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of January 3, 2026. Based upon their evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of January 3, 2026, to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control
There has been no change in the company’s internal control over financial reporting during the quarter ended January 3, 2026, that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)).
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on this assessment, the company’s management believes that, as of January 3, 2026, our internal control over financial reporting was effective at a reasonable assurance level. The company’s internal control over financial reporting as of January 3, 2026, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its attestation report, which is included herein.
Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our internal control over financial reporting will prevent all errors or fraud. Because of inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Snap-on Incorporated
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Snap-on Incorporated and subsidiaries (the “Company”) as of January 3, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 3, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 3, 2026, of the Company and our report dated February 12, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Milwaukee, Wisconsin
54 SNAP-ON INCORPORATED
Item 9B: Other Information
Executive Officer and Director Rule 10b5-1 Trading Arrangements
In accordance with the disclosure requirement set forth in Item 408(a) of Regulation S-K, the following table discloses any officer (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) or director who adopted a contract, instruction or written plan for the sale of securities of the company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) during the quarterly period ended January 3, 2026:
Other than as disclosed above, no other officer or director adopted, modified or terminated a contract, instruction or written plan for the purchase or sale of securities of the company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement.
Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10: Directors, Executive Officers and Corporate Governance
Incorporated by reference to the sections entitled “Item 1: Election of Directors,” “Corporate Governance Practices and Board Information” and “Other Information” in Snap-on’s 2026 Annual Meeting Proxy Statement, which is expected to be mailed to shareholders on or about March 12, 2026 (the “2026 Proxy Statement”).
The Section 16(a) filing compliance disclosure pursuant to Item 405 of Regulation S-K is contained in Snap-on’s 2026 Proxy Statement in the section entitled “Other Information – Delinquent Section 16(a) Reports,” and is incorporated herein by reference.
Information regarding the company’s insider trading policies and procedures is contained in “Corporate Governance Practices and Board Information – Insider Trading Policy” in the 2026 Proxy Statement, which is incorporated herein by reference.
Information about our Executive Officers
Information regarding Snap-on’s executive officers, including their ages, business experience (for at least the last five years) and titles as of January 3, 2026, is presented below:
Nicholas T. Pinchuk (79) – Chairman of the Board of Directors since 2009, President and Chief Executive Officer since December 2007, and President and Chief Operating Officer during 2007. Senior Vice President and President – Worldwide Commercial & Industrial Group from 2002 to 2007. Prior to joining Snap-on, Mr. Pinchuk held various positions, including President of Global Refrigeration Operations and President of Asia Pacific Operations, at Carrier Corporation, a producer of air conditioning, heating and refrigeration systems, and a subsidiary of United Technologies Corporation. Mr. Pinchuk served as an officer of the U.S. Army in Vietnam.
Aldo J. Pagliari (71) – Senior Vice President – Finance and Chief Financial Officer since 2010.
Jesus M. Arregui (60) – Senior Vice President and President – Commercial Group since 2019.
Mary E. Bauerschmidt (59) – Senior Vice President – Human Resources and Chief Development Officer since 2025, Senior Vice President – Human Resources since 2024, and Vice President – Human Resources from 2018 to 2024.
Iain Boyd (63) – Vice President – Operations Development since 2015.
Timothy L. Chambers (61) – Senior Vice President and President – Snap-on Tools Group since 2019.
June C. Lemerand (63) – Vice President and Chief Information Officer since 2017.
Richard T. Miller (55) – Vice President, General Counsel and Secretary since 2018.
Marty V. Ozolins (54) – Vice President and Controller since 2021. Vice President, and formerly Director, of Internal Audit from 2016 to 2021.
Thomas J. Ward (73) – Senior Vice President and President – Repair Systems & Information Group since 2010.
Snap-on’s executive officers include two women, a veteran of the U.S. Army, and an executive who is ethnically diverse.
Additionally, there is no family relationship among the executive officers and there has been no involvement in legal proceedings during the past 10 years that would be material to the evaluation of the ability or integrity of any of the executive officers. Executive officers may either be elected by the Board or may be appointed by the Chief Executive Officer at the regular meeting of the Board that follows the Annual Shareholders’ Meeting, which is ordinarily held in April each year, or at such other times as new positions are created or vacancies must be filled.
56 SNAP-ON INCORPORATED
Code of Ethics and Website Disclosure
Snap-on has adopted a written code of ethics that applies to its Chief Executive Officer, Chief Financial Officer, Vice President and Controller, and all other financial officers and executives performing similar functions. Snap-on has posted a copy of the code of ethics in the “Investors” section of the company’s website at www.snapon.com. Snap-on will also post any amendments to these documents, or information about any waivers granted to directors or executive officers with respect to the Code of Business Conduct and Ethics, on the company’s website at www.snapon.com.
Snap-on intends to satisfy the disclosure requirements under Item 10 of Form 8-K regarding amendments to, or waivers from, the code of ethics by posting such information in the “Investors” section of the company’s website at www.snapon.com.
Item 11: Executive Compensation
The information required by Item 11 is contained in Snap-on’s 2026 Proxy Statement in the sections entitled “Executive Compensation,” “Board Compensation,” “Compensation Committee Report,” and “Other Information” and is incorporated herein by reference.
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information about Snap-on’s equity compensation plans at 2025 year end:
(1)Includes (i) stock options and stock appreciation rights (“SARs”) to acquire 1,836,519 shares granted under the 2011 Incentive Stock and Awards Plan (the “2011 Plan”); (ii) 62,853 shares represented by restricted stock units granted under the 2011 Plan; and (iii) 7,392 shares represented by deferred share units under the Directors’ Fee Plan. Excludes 118,409 shares issuable in connection with the vesting of performance share awards under the 2011 Plan. Also excludes shares of common stock that may be issuable under the employee and franchisee stock purchase plans.
(2)Reflects only the weighted-average exercise price of outstanding stock options and SARs granted under the 2011 Plan and does not include shares represented by deferred share units under the Directors’ Fee Plan and shares issuable in connection with the vesting of restricted stock units or performance units under the 2011 Plan for which there are no exercise prices. Also excludes shares of common stock that may be issuable under the employee and franchisee stock purchase plans.
(3)Includes (i) 1,730,084 shares reserved for issuance under the 2011 Plan; (ii) 194,416 shares reserved for issuance under the Directors’ Fee Plan; and (iii) 505,119 shares reserved for issuance under the employee stock purchase plan.
(4)Consists of deferred share units under Snap-on’s Deferred Compensation Plan, which allows elected and appointed officers of Snap-on to defer all or a percentage of their respective annual salary and/or incentive compensation. The deferred share units are payable in shares of Snap-on common stock on a one-for-one basis and are calculated at fair market value. Shares of common stock delivered under the Deferred Compensation Plan are previously issued shares reacquired and held by Snap-on.
(5)The Deferred Compensation Plan provides that Snap-on will make available, as and when required, a sufficient number of shares of common stock to meet the needs of the plan. It further provides that such shares shall be previously issued shares reacquired and held by Snap-on.
The additional information required by Item 12 is contained in Snap-on’s 2026 Proxy Statement in the sections entitled “Executive Compensation,” “Security Ownership of Certain Beneficial Owners and Management,” and “Other Information,” and is incorporated herein by reference.
Item 13: Certain Relationships and Related Transactions, and Director Independence
Incorporated by reference to the sections entitled “Corporate Governance Practices and Board Information – Board Information” and “Other Information – Transactions with the Company” in Snap-on’s 2026 Proxy Statement.
Item 14: Principal Accountant Fees and Services
Incorporated by reference to the section entitled “Deloitte & Touche LLP Fee Disclosure” in Snap-on’s 2026 Proxy Statement.
PART IV
Item 15: Exhibit and Financial Statement Schedules
Item 15(a): Documents Filed as Part of This Report:
1. List of Financial Statements
Unless otherwise indicated, references 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 to 2025, 2024 and 2023 year end refer to January 3, 2026, December 28, 2024, and December 30, 2023, respectively.
The following consolidated financial statements of Snap-on and the Report of Independent Registered Public Accounting Firm thereon, are filed as part of this report:
•Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34).
•Consolidated Statements of Earnings for the 2025, 2024 and 2023 fiscal years.
•Consolidated Statements of Comprehensive Income for the 2025, 2024 and 2023 fiscal years.
•Consolidated Balance Sheets as of 2025 and 2024 year end.
•Consolidated Statements of Equity for the 2025, 2024 and 2023 fiscal years.
•Consolidated Statements of Cash Flows for the 2025, 2024 and 2023 fiscal years.
•Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
All schedules are omitted because they are not applicable, or the required information is included in the consolidated financial statements or notes thereto.
58 SNAP-ON INCORPORATED
3. List of Exhibits(*)
(e) Description of Securities
Except for the foregoing, Snap-on and its subsidiaries have no unregistered long-term debt agreement for which the related outstanding debt exceeds 10% of consolidated total assets as of January 3, 2026. Copies of debt instruments for which the related debt is less than 10% of consolidated total assets will be furnished to the Commission upon request.
(10) Material Contracts
60 SNAP-ON INCORPORATED
(21) Subsidiaries of the Corporation
(23) Consent of Independent Registered Public Accounting Firm
(101.SCH) Inline XBRL Taxonomy Extension Schema Document
(101.CAL) Inline XBRL Taxonomy Extension Calculation Linkbase Document
(101.DEF) Inline XBRL Taxonomy Extension Definition Linkbase Document
(101.LAB) Inline XBRL Taxonomy Extension Label Linkbase Document
(101.PRE) Inline XBRL Taxonomy Extension Presentation Linkbase Document
(104) Cover Page Interactive Data File (contained in Exhibit 101)
** Represents a management compensatory plan or agreement.
Item 16: Form 10-K Summary
None.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Snap-on Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Snap-on Incorporated and subsidiaries (the “Company”) as of January 3, 2026, and December 28, 2024, the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the three years in the period ended January 3, 2026, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 3, 2026, and December 28, 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 3, 2026, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 3, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 12, 2026, expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
62 SNAP-ON INCORPORATED
Finance Receivables – Net - Allowance for Credit Losses - Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
The Company’s 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. The receivables are generally secured by the underlying tools, diagnostics, and/or equipment products financed. Determining the proper level of allowance requires management to exercise judgment about the timing, frequency, and severity of credit losses expected to occur over the life of the contracts. The Company estimates and records an allowance for credit losses over the remaining contractual life of their contracts considering collectability, historical loss experience, current conditions, and future market expectations.
Evaluating the judgments related to the finance receivable allowance for credit losses is subjective and requires auditor judgment to effectively evaluate whether management’s judgments were reasonable.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the finance receivables allowance for credit losses balance included the following procedures, among others:
•We tested the design, implementation, and operating effectiveness of management’s controls over the allowance for credit losses including controls over the completeness and accuracy of underlying data.
•Where appropriate, we assessed the reasonableness of, and evaluated support for, qualitative adjustments based on market conditions and/or portfolio performance metrics.
•We tested the accuracy and evaluated the relevance of the historical loss data used in determining the qualitative adjustments.
•We tested the completeness and accuracy and evaluated the relevance of the key data used as inputs in management’s allowance for credit losses calculation, including finance receivables balances, recoveries, charge-offs, portfolio characteristics, and other data.
•We tested the mathematical accuracy of the allowance for credit losses and developed an independent expectation of the allowance for credit losses and compared it to the recorded balance.
/s/ Deloitte & Touche LLP
Milwaukee, Wisconsin
We have served as the Company’s auditor since 2002.
Snap-on Incorporated – Consolidated Statements of Earnings
Net earnings attributable to noncontrolling interests (25.4) (25.0) (23.5)
Net earnings attributable to Snap-on Incorporated $ 1,016.9 $ 1,043.9 $ 1,011.1
Net earnings per share attributable to Snap-on Incorporated:
Weighted-average shares outstanding:
Effect of dilutive securities 0.9 0.9 1.0
See Notes to Consolidated Financial Statements.
64 SNAP-ON INCORPORATED
Snap-on Incorporated – Consolidated Statements of Comprehensive Income
Comprehensive income:
Other comprehensive income (loss):
Reclassification of cash flow hedges to net earnings (1.7) (1.7) (1.6)
Defined benefit pension and postretirement plans:
Income tax benefit (expense) (8.1) 7.1 (6.8)
Income tax benefit (5.3) (2.0) (0.1)
See Notes to Consolidated Financial Statements.
Snap-on Incorporated – Consolidated Balance Sheets
Fiscal Year End
(Amounts in millions, except share data) 2025 2024
ASSETS
Current assets:
Trade and other accounts receivable – net 881.4 815.6
Prepaid expenses and other current assets 151.5 139.6
Operating lease right-of-use assets 83.7 89.4
Deferred income tax assets 72.5 78.0
Long-term finance receivables – net 1,298.8 1,312.0
Long-term contract receivables – net 423.1 418.3
Other intangible assets – net 270.7 267.6
Other long-term assets 25.1 17.3
LIABILITIES AND EQUITY
Current liabilities:
Deferred income tax liabilities 87.0 73.5
Retiree health care benefits 17.7 19.4
Operating lease liabilities 61.8 68.6
Other long-term liabilities 98.4 92.9
Commitments and contingencies (Note 15)
Equity
Shareholders’ equity attributable to Snap-on Incorporated:
Accumulated other comprehensive loss (354.8) (575.0)
Total shareholders’ equity attributable to Snap-on Incorporated 5,931.8 5,394.1
Noncontrolling interests 25.0 22.9
See Notes to Consolidated Financial Statements.
66 SNAP-ON INCORPORATED
Snap-on Incorporated – Consolidated Statements of Equity
Shareholders’ Equity Attributable to Snap-on Incorporated
Other comprehensive income — — — 78.8 — — 78.8
Cash dividends – $6.72 per share — — (355.6) — — — (355.6)
Other comprehensive loss — — — (125.5) — — (125.5)
Cash dividends – $7.72 per share — — (406.4) — — — (406.4)
Other comprehensive income — — — 220.2 — — 220.2
Cash dividends – $8.86 per share — — (462.2) — — — (462.2)
Stock compensation plans — 20.8 — — 72.1 — 92.9
See Notes to Consolidated Financial Statements.
Snap-on Incorporated – Consolidated Statements of Cash Flows
Operating activities:
Amortization of other intangible assets 22.7 25.3 27.1
Provisions for losses on finance receivables 72.9 71.1 57.2
Provisions for losses on non-finance receivables 21.3 22.8 19.2
Stock-based compensation expense 28.9 28.6 44.7
Deferred income tax provision (benefit) 2.5 (8.2) (18.7)
Gain on sales of assets (16.0) (0.6) (1.0)
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade and other accounts receivable (61.8) (72.9) (45.2)
Prepaid expenses and other assets 25.5 10.4 35.1
Accrued and other liabilities (34.3) (40.0) (12.2)
Investing activities:
Acquisitions of businesses, net of cash acquired — — (42.6)
Disposals of property and equipment 20.4 3.1 2.7
Net cash used by investing activities (73.1) (204.1) (331.8)
Financing activities:
Net increase (decrease) in other short-term borrowings 3.3 (1.3) (1.7)
Proceeds from stock purchase plans and stock option exercises 73.9 92.3 113.6
Net cash used by financing activities (749.9) (649.8) (572.9)
Effect of exchange rate changes on cash and cash equivalents 5.3 (4.6) (5.2)
Supplemental cash flow disclosures:
Cash paid for interest $ (44.6) $ (44.1) $ (44.5)
See Notes to Consolidated Financial Statements.
68 SNAP-ON INCORPORATED
Notes to Consolidated Financial Statements
Note 1: Summary of Accounting Policies
Principles of consolidation and presentation: The Consolidated Financial Statements include the accounts of Snap‐on Incorporated and its wholly-owned and majority-owned subsidiaries (collectively, “Snap-on” or “the company”). The Consolidated Financial Statements do not include the accounts of the company’s independent franchisees. Snap-on’s Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Intercompany accounts and transactions have been eliminated.
Fiscal year accounting period: Snap-on’s fiscal year ends on the Saturday that is on or nearest to December 31. The 2025 fiscal year ended on January 3, 2026 (“2025”), the 2024 fiscal year ended on December 28, 2024 (“2024”), and the 2023 fiscal year ended on December 30, 2023 (“2023”). The 2025 fiscal year contained 53 weeks of operating results with the additional week occurring in the fourth quarter. The impact of the additional week of operations was not material to Snap-on’s 2025 total revenues or net earnings. The 2024 and 2023 fiscal years each contained 52 weeks of operating results.
Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial instruments: The fair value of the company’s derivative financial instruments is generally determined using quoted prices in active markets for similar assets and liabilities. The carrying value of the company’s non-derivative financial instruments either approximates fair value, due to their short-term nature, or the amount disclosed for fair value is based upon a discounted cash flow analysis or quoted market values. See Note 10 for additional information on financial instruments.
Revenue recognition: Snap-on recognizes revenue from the sale of tools, diagnostics, equipment, and related services based on when control of the product passes to the customer or the service is provided and is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services. See Note 2 for information on revenue recognition.
Financial services revenue: Snap-on generates revenue from various financing programs that include: (i) installment sales and lease contracts arising from franchisees’ customers and Snap-on customers who require financing for the purchase or lease of tools, diagnostics, and equipment products on an extended-term payment plan; and (ii) business and vehicle loans and leases to franchisees. These financing programs are offered through Snap-on’s wholly owned finance subsidiaries. Financial services revenue consists primarily of interest income on finance and contract receivables and is recognized over the life of the underlying contracts, with interest computed primarily on the average daily balances of the underlying contracts.
The decision to finance through Snap-on or another financing source is solely at the election of the customer. When assessing customers for potential financing, Snap-on considers various factors regarding ability to pay, including the customers’ financial condition, past payment experience, and credit bureau and proprietary Snap-on credit model information, as well as the value of the underlying collateral. For finance and contract receivables, Snap-on assesses quantitative and qualitative factors through the use of credit quality indicators consisting primarily of collection experience and related internal metrics. Delinquency is the primary indicator of credit quality for finance and contract receivables. Snap-on conducts monthly reviews of credit and collection performance for both the finance and contract receivable portfolios, focusing on data such as delinquency trends, nonaccrual receivables, and write-off and recovery activity.
Financial services lease arrangements: Snap-on accounts for its financial services leases as sales-type leases. The company recognizes the net investment in the lease as the present value of the lease payments not yet received plus the present value of the unguaranteed residual value, using the interest rate implicit in the lease. The difference between the undiscounted lease payments received over the lease term and the related net investment in the lease is reported as unearned finance charges. Unearned finance charges are amortized to income over the life of the contract. The default covenants included in the lease arrangements are usual and customary, consistent with industry practice, and do not impact the lease classification. Except in circumstances where the company has concluded that a lessee’s financial condition has deteriorated, the other default covenants under Snap-on’s lease arrangements are objectively determinable. See Notes 4 and 16 for additional information on finance and contract receivables and lessor accounting.
Research and engineering: Snap-on incurred research and engineering costs of $72.4 million, $67.0 million and $64.7 million in 2025, 2024 and 2023, respectively. Research and engineering costs are included in “Operating expenses” on the accompanying Consolidated Statements of Earnings.
Notes to Consolidated Financial Statements (continued)
Internally developed software: Costs incurred in the development of software that will ultimately be sold are capitalized from the time technological feasibility has been attained and capitalization ceases when the related product is ready for general release. During 2025, 2024 and 2023, Snap-on capitalized $18.9 million, $13.3 million and $11.0 million, respectively, of such costs. Amortization of capitalized software development costs, which is included in “Cost of goods sold” on the accompanying Consolidated Statements of Earnings, was $11.6 million in 2025, $10.7 million in 2024 and $10.5 million in 2023. Unamortized capitalized software development costs of $54.3 million as of 2025 year end and $44.0 million as of 2024 year end are included in “Other intangible assets – net” on the accompanying Consolidated Balance Sheets.
Internal-use software: Costs that are incurred in creating software solutions and enhancements to those solutions are capitalized only for the application development stage of the project.
Shipping and handling: Amounts billed to customers for shipping and handling are included as a component of sales. Costs incurred by Snap-on for shipping and handling are included as a component of cost of goods sold when the costs relate to manufacturing activities and when billed to customers as part of the sales transaction. In 2025, 2024 and 2023, Snap-on incurred shipping and handling charges of $66.9 million, $65.5 million and $72.0 million, respectively, that were recorded in “Cost of goods sold” on the accompanying Consolidated Statements of Earnings. Shipping and handling costs incurred in conjunction with selling or distribution activities are included as a component of operating expenses. Shipping and handling charges were $108.8 million in 2025, $116.4 million in 2024 and $107.8 million in 2023; these charges were recorded in “Operating expenses” on the accompanying Consolidated Statements of Earnings. Other freight-related costs recorded in “Operating expenses” on the accompanying Consolidated Statements of Earnings in 2023 totaled $11.5 million.
Advertising and promotion: Production costs of future media advertising are deferred until the advertising occurs. All other advertising and promotion costs are expensed when incurred. In 2025, 2024 and 2023, advertising and promotion expenses totaled $56.6 million, $47.5 million and $44.5 million, respectively. Advertising and promotion costs are included in “Operating expenses” on the accompanying Consolidated Statements of Earnings.
Warranties: Snap-on provides product warranties for specific product lines and accrues for estimated future warranty costs in the period in which the sale is recorded. See Notes 2 and 15 for information on warranties.
Foreign currency: The financial statements of Snap-on’s foreign subsidiaries are translated into U.S. dollars. Assets and liabilities of foreign subsidiaries are translated at current rates of exchange, and income and expense items are translated at the average exchange rates for the period. The resulting translation adjustments are recorded directly into “Accumulated other comprehensive loss” on the accompanying Consolidated Balance Sheets. Foreign exchange transactions, net of foreign currency hedges, resulted in pretax losses of $3.6 million, $7.4 million and $11.0 million in 2025, 2024 and 2023, respectively. Foreign exchange transaction gains and losses are reported in “Other income (expense) – net” on the accompanying Consolidated Statements of Earnings.
Income taxes: Current tax assets and liabilities are based upon an estimate of taxes refundable or payable for each of the jurisdictions in which the company is subject to tax. In the ordinary course of business, there is inherent uncertainty in quantifying income tax positions. Snap-on assesses income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, Snap-on records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. When applicable, associated interest and penalties are recognized as a component of income tax expense. Accrued interest and penalties are included within the related tax asset or liability on the accompanying Consolidated Balance Sheets.
Deferred income taxes are provided for temporary differences arising from differences in bases of assets and liabilities for tax and financial reporting purposes. Deferred income taxes are recorded on temporary differences using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. See Note 8 for additional information on income taxes.
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Per share data: Basic earnings per share calculations were computed by dividing net earnings attributable to Snap‐on Incorporated by the corresponding weighted-average number of common shares outstanding for the period. The dilutive effect of the potential exercise of outstanding stock options and stock-settled stock appreciation rights (“SARs”) to purchase common shares is calculated using the treasury stock method. As of January 3, 2026, there were 510,982 awards outstanding that were anti-dilutive, and as of December 28, 2024, and December 30, 2023, there were no awards outstanding that were anti-dilutive. Performance-based equity awards are included in the diluted earnings per share calculation based on the attainment of the applicable performance metrics to date. Snap-on had dilutive securities totaling 845,729 shares, 905,610 shares and 1,060,072 shares, as of the end of 2025, 2024 and 2023, respectively. See Note 13 for additional information on equity awards.
Stock-based compensation: Snap-on recognizes the cost of employee services in exchange for awards of equity instruments based on the grant date fair value of those awards. That cost, based on the estimated number of awards that are expected to vest, is recognized on a straight-line basis over the period during which the employee is required to provide the service in exchange for the award. No compensation cost is recognized for awards for which employees do not render the requisite service. The grant date fair value of employee stock options and similar instruments is estimated using the Black-Scholes valuation model.
The Black-Scholes valuation model requires the input of subjective assumptions, including the expected life of the stock-based award and stock price volatility. The assumptions used are management’s best estimates, but the estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, the recorded stock-based compensation expense could have been materially different from that depicted in the financial statements. See Note 13 for additional information on stock-based compensation.
Derivatives: Snap-on may utilize derivative financial instruments, including foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements to manage its exposures to foreign currency exchange rate risks, interest rate risks, and market risk associated with the stock-based portion of its deferred compensation plans. Snap-on accounts for its derivative instruments at fair value. Snap-on does not use financial instruments for speculative or trading purposes. See Note 10 for additional information on derivatives.
Cash equivalents: Snap-on considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consisted of investments in money market funds and bank deposits at January 3, 2026, and December 28, 2024.
Receivables and allowances for credit losses: All trade, finance and contract receivables are reported on the Consolidated Balance Sheets at their amortized cost adjusted for any write-offs and net of allowances for credit losses. The amortized cost for finance and contract receivables is the amount originated adjusted for applicable accrued interest and net of deferred fees or costs, net of collections and write-offs.
Snap-on maintains allowances for credit losses, which represent an estimate of expected credit losses over the remaining contractual life of its receivables considering current conditions and supportable forecasts when appropriate. The estimate is a result of the company’s ongoing assessments and evaluations of collectability, historical loss experience, current conditions, and future market expectations in each of its receivable portfolios (trade, finance and contract receivables). For trade receivables, Snap-on uses historical loss experience rates by portfolio and applies them to a related aging analysis while also considering customer and/or economic risk where appropriate. Snap-on uses a vintage loss experience methodology for finance receivables. For contract receivables, Snap-on primarily uses a Weighted-Average Remaining Maturity (“WARM”) methodology. Determination of the proper amount of allowances by portfolio requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provisions for credit losses and, as a result, net earnings. The allowances take into consideration numerous quantitative and qualitative factors that include receivable type, historical loss experience, delinquency trends, collection experience, current conditions, supportable forecasts, when appropriate, and credit risk characteristics.
Snap-on evaluates the credit risk of the customer when extending credit based on a combination of various financial and qualitative factors that may affect its customers’ ability to pay. These factors may include the customer’s financial condition, past payment experience, and credit bureau and proprietary Snap-on credit model information, as well as the value of the underlying collateral.
Notes to Consolidated Financial Statements (continued)
Management performs detailed reviews of its receivables on a monthly and/or quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred. Monthly reviews of credit and collection performance are conducted for both its finance and contract receivable portfolios focusing on data such as delinquency trends, non-performing assets, and write-off and recovery activity. These reviews allow for the formulation of collection strategies and potential collection policy modifications in response to changing risk profiles in the finance and contract receivable portfolios. A receivable generally has credit losses when it is expected that all amounts related to the receivable will not be collected according to the contractual terms of the agreement. Amounts determined to be uncollectable are charged directly against the allowances, while amounts recovered on previously written off accounts increase the allowances. For both finance and contract receivables, write-offs include the uncollectable principal amount of the receivable as well as the uncollectable accrued interest, net of repossessions. For finance receivables only, write-offs are partially offset by recourse from franchisees. Recovered interest previously written off are recorded through the allowances for credit losses and increase the allowances.
Absent a repossession, finance receivables are generally written off when an account becomes 120 days past due. Repossessed accounts are typically written off within 60 days of asset repossession. Contract receivables related to equipment leases are generally written off when an account becomes 150 days past due, while contract receivables related to franchise finance and van leases are generally written off no later than when the receivable becomes 180 days past the asset return date. For finance and contract receivables, customer bankruptcies are generally written off upon notification that the associated debt is not being reaffirmed or, in any event, no later than when the receivable becomes 180 days past due. Changes to the allowances for credit losses are maintained through adjustments to the provisions for credit losses.
Actual amounts as of the balance sheet dates may be materially different than the amounts reported in future periods due to the uncertainty in the estimation process. Also, future amounts could differ materially from those estimates due to changes in circumstances after the balance sheet date.
Snap-on does not believe that its trade, finance or contract receivables represent significant concentrations of credit risk because of the diversified portfolio of individual customers and geographical areas. See Note 4 for additional information on receivables and allowances for credit losses.
Other accrued liabilities:Supplemental balance sheet information for “Other accrued liabilities” as of 2025 and 2024 year end is as follows:
Operating lease liabilities 27.5 25.0
Deferred subscription revenue 68.1 59.0
Accrued new tool return 57.2 51.2
Accrued property, payroll and other taxes 28.2 28.5
Accrued selling and promotion expense 38.5 37.5
Total other accrued liabilities $ 465.1 $ 457.7
Inventories: Snap-on values its inventory at the lower of cost or net realizable value and adjusts for the value of inventory that is estimated to be excess, obsolete or otherwise unmarketable. Snap-on records allowances for excess and obsolete inventory based on historical and estimated future demand and market conditions. Allowances for raw materials are largely based on an analysis of raw material age and actual physical inspection of raw material for fitness for use. As part of evaluating the adequacy of allowances for work-in-progress and finished goods, management reviews individual product stock-keeping units (SKUs) by product category and product life cycle. Cost adjustments for each product category/product life-cycle state are generally established and maintained based on a combination of historical experience, forecasted sales and promotions, technological obsolescence, inventory age and other actual known conditions and circumstances. Should actual product marketability and raw material fitness for use be affected by conditions that are different from management estimates, further adjustments to inventory allowances may be required.
Snap-on adopted the “last-in, first-out” (“LIFO”) inventory valuation method in 1973 for its U.S. locations. Snap-on’s U.S. inventories accounted for on a LIFO basis consist of purchased product and inventory manufactured at the company’s heritage U.S. manufacturing facilities (primarily hand tools and tool storage). Since the 1990s, the company has used the “first-in, first-out” (“FIFO”) inventory valuation methodology for acquisitions; the company does not adopt the LIFO inventory valuation methodology for new acquisitions. See Note 5 for additional information on inventories.
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Property and equipment: Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over estimated useful lives. Major repairs that extend the useful life of an asset are capitalized, while routine maintenance and repairs are expensed as incurred. Capitalized internal-use software is depreciated on a straight-line basis over estimated useful lives. Long-lived assets, including operating lease right-of-use assets, are evaluated for impairment when events or circumstances indicate that the carrying amount of the long-lived asset may not be recoverable. See Note 6 for additional information on property and equipment.
Goodwill and other intangible assets: Goodwill and other indefinite-lived assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. Annual impairment tests are performed by the company in the second quarter of each year using information available as of April month end. Snap‐on evaluates the existence of goodwill and indefinite-lived intangible asset impairment on the basis of whether the assets are fully recoverable from projected, discounted cash flows of the related reportable unit or asset. Intangible assets with finite lives are amortized over their estimated useful lives using the straight-line method. Intangible assets with finite lives are evaluated for impairment when events or circumstances indicate that the carrying amount of the intangible asset may not be recoverable. See Note 7 for additional information on goodwill and other intangible assets.
New accounting standards: In 2025, Snap-on adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU was applied on a retrospective basis. The adoption of this ASU resulted in enhanced disclosures, including comparative effective income tax rate and income taxes paid information for all years presented, but otherwise had no impact on the company’s Consolidated Financial Statements. See Note 8 for additional information on income taxes.
In 2025, Snap-on also adopted ASU No. 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows entities to elect a practical expedient that assumes that the current conditions as of the balance sheet date do not change for the remaining life of the asset for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The guidance was adopted on a prospective basis. The adoption of this ASU did not have a material impact on Snap-on’s Consolidated Financial Statements. See Note 4 for additional information on receivables.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to software development project stages so that the guidance is neutral to different software development methods. Therefore, under the ASU, software capitalization will begin when management has authorized and committed to funding the software project and when it is probable that the project will be completed and the software will be used to perform the function intended. ASU No. 2025-06 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The guidance is to be applied on a prospective basis, or on a modified transition approach or a retrospective transition approach; this ASU allows for early adoption. The adoption of this ASU is not expected to have a material impact on Snap-on’s Consolidated Financial Statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated expense information in the notes to the financial statements related to purchases of inventory, employee compensation, depreciation, intangible asset amortization and selling expenses for each statement of earnings line item that contains those expenses. ASU No. 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The guidance is to be applied on a prospective basis with the option to apply the standard retrospectively; this ASU allows for early adoption. The adoption of this ASU is being evaluated by the company and is not expected to have a material impact on Snap-on’s Consolidated Financial Statements.
Note 2: Revenue Recognition
Snap-on recognizes revenue from the sale of tools, diagnostics, equipment, and related services based on when control of the product passes to the customer or the service is provided and is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services.
Notes to Consolidated Financial Statements (continued)
Revenue disaggregation
The following table shows the consolidated revenues by revenue source:
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 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. Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results. The Financial Services operating segment is evaluated based on financial services revenue and segment operating earnings.
The following tables represent external net sales disaggregated by geography, based on the customers’ billing addresses:
Commercial & Snap-on Repair Systems
Industrial Tools & Information Financial Snap-on
(Amounts in millions) Group Group Group Services Eliminations Incorporated
Net sales:
Financial services revenue — — — 412.9 — 412.9
Commercial & Snap-on Repair Systems
Industrial Tools & Information Financial Snap-on
(Amounts in millions) Group Group Group Services Eliminations Incorporated
Net sales:
Financial services revenue — — — 401.0 — 401.0
* North America is comprised of the United States, Canada and Mexico.
74 SNAP-ON INCORPORATED
Commercial & Snap-on Repair Systems
Industrial Tools & Information Financial Snap-on
(Amounts in millions) Group Group Group Services Eliminations Incorporated
Net sales:
Financial services revenue — — — 378.1 — 378.1
* North America is comprised of the United States, Canada and Mexico.
The following tables represent external net sales disaggregated by customer type:
Commercial & Snap-on Repair Systems
Industrial Tools & Information Financial Snap-on
(Amounts in millions) Group Group Group Services Eliminations Incorporated
Net sales:
Financial services revenue — — — 412.9 — 412.9
Commercial & Snap-on Repair Systems
Industrial Tools & Information Financial Snap-on
(Amounts in millions) Group Group Group Services Eliminations Incorporated
Net sales:
Financial services revenue — — — 401.0 — 401.0
Notes to Consolidated Financial Statements (continued)
Commercial & Snap-on Repair Systems
Industrial Tools & Information Financial Snap-on
(Amounts in millions) Group Group Group Services Eliminations Incorporated
Net sales:
Financial services revenue — — — 378.1 — 378.1
Nature of goods and services: Snap-on derives net sales from a broad line of products and complementary services that are grouped into three categories: (i) tools; (ii) diagnostics, information and management systems; and (iii) equipment. The tools product category includes hand tools, power tools, tool storage products and other similar products. The diagnostics, information and management systems product category includes handheld and computer-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer (“OEM”) purchasing facilitation services, and warranty management systems and analytics to help OEM dealership service and repair shops (“OEM dealerships”) manage and track performance. The equipment product category includes solutions for the service of vehicles and industrial equipment. Snap-on supports the sale of its diagnostics and vehicle service shop equipment by offering training programs as well as after-sales support to its customers. Through its financial services businesses, Snap‐on derives revenue from various financing programs designed to facilitate the sales of its products and support its franchise business.
Approximately 90% of Snap-on’s net sales are products sold at a point in time through ship-and-bill performance obligations that also include repair services. The remaining sales revenue is earned over time primarily for software subscriptions, other subscription service agreements and extended warranty programs.
Snap-on enters into contracts related to the selling of tools, diagnostics, repair information, equipment and related services. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, Snap-on considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Contracts with customers are comprised of customer purchase orders, invoices and written contracts.
For certain performance obligations related to software subscriptions, extended warranty and other subscription agreements that are settled over time, Snap-on has elected not to disclose the value of unsatisfied performance obligations for: (i) contracts that have an original expected length of one year or less; (ii) contracts where revenue is recognized as invoiced; and (iii) contracts with variable consideration related to unsatisfied performance obligations. The remaining duration of these unsatisfied performance obligations ranges from one month up to 60 months. Snap-on had $221.3 million of long-term contracts that have fixed consideration that extends beyond one year as of January 3, 2026. Snap-on expects to recognize approximately 70% of these contracts as revenue by the end of fiscal 2027, an additional 25% by the end of fiscal 2029 and the balance thereafter.
Snap-on typically expenses incremental direct costs of obtaining a contract (sales commissions) when incurred because the amortization period is generally 12 months or less. Capitalized long-term contract costs are not significant. Contract costs are expensed or amortized in “Operating expenses” on the accompanying Consolidated Statements of Earnings.
When performance obligations are satisfied: For performance obligations related to the majority of ship-and-bill products, including repair services contracts, control transfers at a point in time when title transfers upon shipment of the product to the customer, and for some sales, control transfers when title is transferred at time of receipt by customer. Once a product or repaired product has shipped or has been delivered, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from the asset, revenue is recognized. Snap-on considers control to have transferred upon shipment or delivery when Snap-on has a present right to payment, the customer has legal title to the asset, Snap-on has transferred physical possession of the asset, and the customer has significant risk and rewards of ownership of the asset.
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For performance obligations related to software subscriptions, extended warranties and other subscription agreements, Snap-on transfers control and recognizes revenue over time on a ratable basis using a time-based output method. The performance obligations are typically satisfied as services are rendered on a straight-line basis over the contract term, which is generally for 12 months but can be for a term up to 60 months.
Significant payment terms: For ship-and-bill type contracts with customers, the contract states the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payment terms are typically 30 to 120 days after delivery.
For subscription contracts, payment terms are in advance or in arrears of services on a monthly, quarterly or annual basis over the contract term, which is generally for 12 months but can be for a term up to 60 months depending on the product or service. The customer typically agrees to a stated rate and price in the contract that does not vary over the contract term. In some cases, customers prepay for their licenses, or in other cases, pay on a monthly or quarterly basis. When the timing of the payment made by the customer precedes the delivery of the performance obligation, a contract liability is recognized.
Variable consideration: In some cases, the nature of Snap-on’s contracts give rise to variable consideration, including rebates, credits, allowances for returns or other similar items that generally decrease the transaction price. These variable amounts generally are credited to the customer, based on achieving certain levels of sales activity, product returns and making payments within specific terms.
In the normal course of business, Snap-on allows franchisees to return product per the provisions in the franchise agreement that allow for the return of product in a saleable condition. For other customers, product returns are generally not accepted unless the item is defective as manufactured. Where applicable, Snap-on establishes provisions for estimated sales returns. Estimated product returns are recorded as a reduction in reported revenues at the time of sale based upon historical product return experience and is adjusted for known trends to arrive at the amount of consideration that Snap-on expects to receive.
Variable consideration is estimated at the amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available.
Warranties: Snap-on allows customers to return product when the product is defective as manufactured. Where applicable, Snap-on establishes provisions for estimated warranties. Estimated product warranties are provided for specific product lines and Snap-on accrues for estimated future warranty cost in the period in which the sale is recorded. The costs are included in “Cost of goods sold” on the accompanying Consolidated Statements of Earnings. Snap-on calculates its accrual requirements based on historic warranty loss experience that is periodically adjusted for recent actual experience, including the timing of claims during the warranty period and actual costs incurred. Snap-on does not typically provide customers with the right to a refund.
Contract liabilities: Contract liabilities are recorded when cash payments are received in advance of Snap-on’s performance. The timing of payment is typically on a monthly, quarterly or annual basis. The balance of total contract liabilities was $73.5 million at January 3, 2026, and $63.8 million at December 28, 2024. The current portion of contract liabilities is included in “Other accrued liabilities” and the non-current portion of such liabilities is included in “Other long-term liabilities” on the accompanying Consolidated Balance Sheets. In 2025, Snap-on recognized revenue of $58.4 million that was included in the contract liability balance at December 28, 2024, which was primarily from the amortization of software subscriptions, extended warranties and other subscription agreements.
Franchise fee revenue, including nominal, non-refundable initial fees, is recognized upon the granting of a franchise, which is when the company has performed substantially all initial services required by the franchise agreement. Franchise fee revenue also includes ongoing monthly fees (primarily for sales and business training as well as marketing and product promotion programs) that are recognized as the fees are earned. Franchise fee revenue in 2025, 2024 and 2023 totaled $21.2 million, $19.4 million and $18.7 million, respectively.
Notes to Consolidated Financial Statements (continued)