Snap-on(SNA) - 2022 Q4 - Annual Report

Financial Performance - Snap-on's consolidated net sales for 2022 reached $4,492.8 million, a 5.6% increase from$ 4,252.0 million in 2021[26] - Operating earnings before financial services in 2022 were $941.2 million, up$ 89.7 million, or 10.5%, compared to 2021, representing 20.9% of net sales[167] - Net earnings attributable to Snap-on in 2022 were $911.7 million, or$ 16.82 per diluted share, an increase of $91.2 million, or$ 1.90 per diluted share, from 2021[168] - Consolidated net sales for Snap-on in 2022 were $4,492.8 million, an increase of$ 240.8 million, or 5.7%, from 2021, driven by an organic gain of $357.2 million, or 8.7%[166] - Net cash provided by operating activities decreased by$ 291.4 million to $675.2 million in 2022, primarily due to a$ 354.5 million change in net operating assets and liabilities[178] - Net earnings attributable to Snap-on increased by $91.2 million, or 11.1%, to$ 911.7 million in 2022, equating to $16.82 per diluted share[190] - The effective income tax rate on earnings attributable to Snap-on was 22.8% in 2022, down from 23.2% in 2021[190] Sales by Product Category - The tools product category generated$ 2,399.4 million in sales in 2022, up from $2,343.0 million in 2021, reflecting a 2.4% growth[26] - Snap-on's diagnostics, information, and management systems sales increased to$ 942.4 million in 2022, compared to $892.5 million in 2021, marking a 5.6% rise[26] - The equipment product category saw sales of$ 1,151.0 million in 2022, up from $1,016.5 million in 2021, representing a 13.2% increase[26] - Approximately 43% of Snap-on's consolidated net revenues in 2022 were generated by the Snap-on Tools Group, primarily serving vehicle service and repair technicians[77] - The Commercial & Industrial Group reported net sales of$ 1,399.2 million in 2022, a decrease of $7.1 million, or 0.5%, from 2021, despite a 4.5% organic sales increase[170] - The Snap-on Tools Group achieved net sales of$ 2,072.0 million in 2022, an increase of $133.4 million, or 6.9%, with an organic sales gain of 8.5%[171] - The Repair Systems & Information Group's net sales were$ 1,666.9 million in 2022, reflecting a 10.9% increase from 2021, driven by a 12.8% organic sales increase[173] Market Presence and Strategy - Snap-on operates in over 130 countries, with significant markets in the United States, Europe, Canada, and Asia Pacific[17] - The company has implemented a "coherent growth" strategy to expand its professional customer base in both legacy automotive and adjacent markets[18] - Snap-on's recent acquisitions have enhanced its capabilities in critical industries and improved service offerings for independent repair shops and OEM dealerships[24] - Snap-on's industrial sales are primarily focused in the United States, which represents the majority of its total industrial sales[48] - Snap-on's revenues from international operations accounted for approximately 28% of total revenues in 2022, highlighting the importance of non-U.S. markets for future growth[84] Innovation and Development - The company emphasizes continuous improvement through its "Value Creation Processes," focusing on safety, quality, customer connection, innovation, and rapid continuous improvement[18] - The company emphasizes the need for continuous product innovation, as sales from new products are expected to represent a significant portion of future net sales[80] - Snap-on has been actively working to expand its supplier base to ensure the availability of raw materials, particularly steel, which is critical for its manufacturing processes[90] - Snap-on's sustainability framework aligns with the standards of the Value Reporting Foundation, focusing on energy management and employee health and safety[69] Financial Services - Snap-on's Financial Services segment provides financing options for franchisees and customers, contributing to overall revenue growth[32] - Financial services revenue remained stable at $349.7 million in 2022, unchanged from 2021[182] - Snap-on's financing options for U.S. franchisees include van leases and working capital loans, supporting franchisee growth[45] Corporate Responsibility and Sustainability - The company is committed to social responsibility and sustainability, having supported over 250,000 students in earning Snap-on certifications[66] - In 2022, Snap-on reported total greenhouse gas emissions of 101,805 metric tons of CO2e, achieving an intensity of 22.7 metric tons of CO2e per million in net sales, which is over 40% lower than in 2008[68] - The company has adopted policies to eliminate human trafficking and forced labor from its global supply chain, demonstrating a commitment to human rights[12] Workforce and Diversity - Snap-on employed approximately 12,900 people worldwide as of December 31, 2022, with 26.0% of the U.S. workforce being female and 23.5% being minorities[64] - The company has instituted company-wide training on inclusion and unconscious bias to advance diversity and inclusion efforts[12] Risks and Challenges - The company is subject to currency exchange risks, as certain assets and revenues are denominated in currencies other than the U.S. dollar, which could impact financial results[106] - The company faces risks related to the integration of acquired businesses, which could disrupt operations and adversely affect financial condition[98] - The ongoing COVID-19 pandemic poses risks to the company's operations, potentially reducing sales and margins[129] - Economic conditions and global events, such as the war in Ukraine, could negatively affect consumer confidence and spending, impacting sales and margins[131] Shareholder Information - Snap-on had 53,002,580 shares of common stock outstanding as of the end of 2022, with 4,113 registered holders[138] - During Q4 2022, Snap-on repurchased a total of 284,000 shares at an average price of$ 229.66 per share[140] - The approximate value of shares that may yet be purchased under the company's repurchase plans is $362.4 million as of December 31, 2022[141]