Investor Overview - Snap-on
Transcript of Investor Overview - Snap-on
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Investor OverviewThird Quarter 2021
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This is a Possible
Divider Slide
Cautionary Statement
Information included in this presentation may contain statements, including earnings projections, that are forward-looking in nature and,
accordingly, are subject to risks and uncertainties regarding Snap-on’s expected results. Statements made that (i) are in the future tense; (ii) include
the words “expects,” “anticipates,” “intends,” “approximates,” “plans,” “targets,” “estimates,” “believes,” or similar words that reference Snap-on
or its management; (iii) are specifically identified as forward-looking; or (iv) describe Snap-on’s or management’s future outlook, plans, estimates,
objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company’s
actual results may differ materially from those described or contemplated in the forward-looking statements. Factors that may cause the company’s
actual results to differ materially from those contained in the forward-looking statements include those found in the company’s reports filed with the
Securities and Exchange Commission, including the information under the “Safe Harbor” and “Risk Factors” headings in its Annual Report on Form
10-K for the fiscal year ended January 2, 2021, and under the “Caution Regarding Forward-Looking Statements” and “Risk Factors” headings in any
Quarterly Reports on Form 10-Q, which are all incorporated herein by reference. Snap-on disclaims any responsibility to update any forward-
looking statement provided during this presentation, except as required by law.
This presentation includes certain non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a
substitute for their GAAP counterparts. Additional information regarding these non-GAAP measures is included in Snap-on’s Form 10-K and
earnings press releases available at snapon.com. See appendix for reconciliation of non-GAAP measures to GAAP counterparts.
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Snap-on Overview
▪ Founded on innovation in 1920
▪ Makes work easier for serious professionals
performing critical tasks
▪ Unique brand strength
▪ 12,500 associates worldwide
▪ Serves professionals in over 130 countries
▪ 2020 net sales: $3.6 billion
▪ NYSE: SNA / S&P 500
▪ $11.4B Market Capitalization*
▪ 2.3% Cash Dividend Yield*
»Dividends paid without interruption or
reduction since 1939
* As of October 21, 2021
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Snap-on Celebrates Makers and Fixers
▪ We are rooted in the dignity of work
▪ We enable working men and women, the
makers and the fixers, who perform critical
tasks where the penalties for failure are high
▪ We observe work, translate the insights
gained and create solutions for serious
professionals
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Investing in People, Products, Brand
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Unique Productivity Solutions
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Unique Brand Strength
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Organized to Reach Our Primary
Customers: Operating Segments
28%
37%
28%
7%
Repair Systems &
Information Group
(RS&I):Vehicle repair shop
owners and managers
Commercial &
Industrial Group
(C&I):Professionals in a broad
range of critical industries
Snap-on Tools Group
(Franchised Van Business):Vehicle repair technicians
Financial
Services
2020 Revenues by Segment
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U.S. Vehicle Aging
Drives Service Growth
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Average Vehicle Age - 1980-2020
2020
11.9 years
14%
18%
19%
49%
Age of U.S. Vehicles
0-3 Years 4-6 Years
7-10 Years Over 10 Years
Source: IHS Markit 2020
Age
in
Years
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Vehicle Technology and Complexity
Provides Opportunity▪ Increasing vehicle complexity
▪ Advanced Driver Assistance
Systems (ADAS) expanding
» Testing, re-programming and calibration
requirements extending
»Vehicle repairs increasingly require use
of diagnostics
»Sophisticated repair information growing
▪ Productive shop management
rising in importance
▪ Emerging drivetrains create new
solution needs
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The Way Forward:
Runways for
Improvement
Runways for
Growth
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Runways for Improvement
SNAP-ON VALUE CREATION
▪ Safety
▪ Quality
▪ Customer Connection
▪ Innovation
▪ Rapid Continuous Improvement
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2020
95 Locations with
No Lost Time
Incidents
Safety Incident Rate
90% Reduction
Associates are 90% less likely to experience a safety incident today than in 2005
Snap-on Value Creation:
Safety
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Snap-on Value Creation:
QualityThe serious professionals who use our productivity solutions demand superior quality, which Snap-on has provided for over 100 years.
Fernando A.Automotive Technician “It’s always best to buy the tool once rather than buy the cheap tool twice, that’s why I choose Snap-on.”
Jonathan S.Diesel Engine and Pump Technician“Ninety percent of my tools are Snap-on because I know the quality of what I’m purchasing.”
Liana A.Motorcycle Technician“Snap-on has been my tool choice throughout my entire journey and I would not want it any other way.”
Josh Z.Ground Support Equipment Technician“From day one of my dad’s shop, he always used Snap-on for its great quality and durability and that trend continues 23 years later...”
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Snap-on Value Creation:
Customer Connection▪ ~4,800 mobile stores
▪ Multiple direct sales forces
▪ ~700,000 N. American and
European repair shops;
repair networks in emerging
markets growing rapidly
▪ Nearly 2 billion repair
records in database
▪ ~3,200 vocational schools
▪ ~4,000+ annual visitors to
Snap-on’s Innovation Works
We Directly Observe
Customers and
Workplaces
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Snap-on Value Creation:
Innovation
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Snap-on Value Creation:
Rapid Continuous Improvement (RCI)
Operating Margin
before
Financial Services
improved
1,110 basis points
since 2005
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Runways for Growth
▪Enhance the franchise network
▪Expand with repair shop
owners and managers
▪Extend to critical industries
▪Build in emerging markets
Investing in these
Strategically Decisive Areas18
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Snap-on Heritage
Selling Great Tools Through Vans to Vehicle Technicians
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Snap-on More Broadly Defined
Makes work easier for serious professionals
performing critical tasks in workplaces of consequence
where the costs and penalties of failure are high
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Enhance the Franchise Network
▪ Maintain strong franchisee health metrics
▪ Enhance franchisee productivity and improve coverage
▪ Maintain a growing array of new product introductions
▪ Innovate the selling process with programs aimed at
amplifying the power of the van channel
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Expand with Repair Shop
Owners and Managers▪ Leverage deep understanding of customers in
parts and service operations
▪ Help shop owners and managers improve both
technical competency and business acumen
▪ Grow and integrate broad capabilities
▪ Innovate and add new products for this important
customer group
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Extend to Critical Industries
▪ Serve more places where tasks require
repeatability and reliability
▪ Build a deep understanding of the work performed
▪ Provide specialized productivity solutions for
critical tasks
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Build in Emerging Markets
▪ Create manufacturing capacity
▪ Establish distribution and
sales reach
▪ Launch new product lines
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* As adjusted to exclude certain litigation-related matters in 2017 – 2019, excluding restructuring in 2020
Historical data reflects the 2018 adoption of ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715).
Net Sales and OI Margin Trend
$2.85 $2.94$3.06
$3.28$3.35
$3.43 $3.69 $3.74 $3.73$3.59
14.5%15.2%
15.8%16.6%
18.1%
19.3%
18.0%
19.4% 19.2%
17.6%
5%
10%
15%
20%
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1.00
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3.00
4.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$ Billions
Net Sales OI Margin (Before Financial Services) - as a % of Net Sales OI Margin (Before Financial Services) - As Adjusted*
19.3%*
19.3%* 18.9%* 17.9%*
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* As adjusted to exclude certain litigation-related matters, restructuring costs, net debt items and tax changes
Diluted Earnings Per Share
$4.71$5.20
$5.93
$7.14
$8.10
$9.20$9.52
$11.81* $12.26*$11.44
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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Diluted Earnings Per Share Diluted Earnings Per Share - As Adjusted*
$12.41$11.87
$10.12*
Up 2.4x since 2011$11.63*
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* 2011 excludes $18 million arbitration settlement gain; including settlement gain, Financial Services operating earnings were $90.9 million
Financial Services
Financial Services is both strategically important and a strong contributor to company earnings; unique
aspects of the model drive portfolio performance and differentiate from other captive credit companies
$398
$733
$935
$1,084 $1,232
$1,385
$1,591
$1,815
$2,002 $2,083 $2,139 $2,219
($9.1)
$14.4 $72.9
$106.7
$125.7
$149.1 $170.2
$198.7
$217.5 $230.1
$245.9 $248.6
($40)
$0
$40
$80
$120
$160
$200
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$280
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
H2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$ Millions
Ending gross on-book portfolio Financial Services Operating Earnings*
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Increased Dividends
Up 3.9x since 2011
$1.30 $1.40 $1.58
$1.85 $2.20
$2.54 $2.95
$3.41
$3.93
$4.47
$5.11
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
15.4% quarterly dividend increase November 2021;
Dividends paid without interruption or reduction since 1939
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Q3 2021 Summary Results
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2021 2021
($ in millions, except EPS) Q3 2021 Q3 2020 vs. 2020 Q3 2019 vs. 2019
Net Sales $ 1,037.7 $ 941.6 10.2% $ 901.8 15.1%
Organic sales 67.0 7.0% 11.1%
Acquisitions 19.5 2.1 pts 2.3 pts
Currency translation 9.6 1.1 pts 1.7 pts
Operating Earnings before Financial Services $ 201.3 $ 185.7 $ 167.7
Operating Margin before Financial Services 19.4% 19.7% (30) bps 18.6% 80 bps
Operating Earnings from Financial Services $ 70.6 $ 65.6 $ 61.0
Operating Margin Consolidated 24.2% 24.5% (30) bps 23.2% 100 bps
Diluted EPS $ 3.57 $ 3.28 8.8% $ 2.96 20.6%
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▪ Executing on defined and coherent strategies
▪ Unique brand and value proposition – enabling progress in workplaces of consequence . . .
we make critical work easier
▪ Clear runways for improvement – Snap-on Value Creation
▪ Substantial runways for growth
−Enhance the franchise network
−Expand with repair shop owners and managers
−Extend to critical industries
−Build in emerging markets
▪ Priorities for capital allocation include investing in our business (organically and through
acquisition); capital return to shareholders through both dividend and share repurchase
▪ Targeting organic sales growth in the mid-single digits and continuing operating margin
improvement
Snap-on Investment Rationale
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