UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                                   to                                                          

Commission File Number 1-7724

Snap-on Incorporated

(Exact name of registrant as specified in its charter)

Delaware			39-0622040
(State of incorporation)			(I.R.S. Employer Identification No.)
2801 80th Street,	Kenosha,	Wisconsin	53143
(Address of principal executive offices)			(Zip code)

(262) 656-5200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	SNA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

Class	Outstanding at April 14, 2023
Common Stock, $1.00 par value	52,931,821 shares

TABLE OF CONTENTS 

		Page
Part I: Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Earnings (unaudited) – Three Months Ended April 1, 2023, and April 2, 2022	3
	Condensed Consolidated Statements of Comprehensive Income (unaudited) – Three Months Ended April 1, 2023, and April 2, 2022	4
	Condensed Consolidated Balance Sheets (unaudited) – April 1, 2023, and December 31, 2022	5
	Condensed Consolidated Statements of Equity (unaudited) – Three Months Ended April 1, 2023, and April 2, 2022	7
	Condensed Consolidated Statements of Cash Flows (unaudited) – Three Months Ended April 1, 2023, and April 2, 2022	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	45
Part II: Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	47
	Signatures	48

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in millions, except per share data)

(Unaudited)

	Three Months Ended
	April 1, 2023		April 2, 2022
Net sales	$	1,183.0	$	1,097.8
Cost of goods sold	(593.4)		(563.5)
Gross profit	589.6		534.3
Operating expenses	(329.8)		(311.2)
Operating earnings before financial services	259.8		223.1
Financial services revenue	92.6		87.7
Financial services expenses	(26.3)		(17.3)
Operating earnings from financial services	66.3		70.4
Operating earnings	326.1		293.5
Interest expense	(12.4)		(11.6)
Other income (expense) – net	15.2		8.3
Earnings before income taxes	328.9		290.2
Income tax expense	(74.6)		(67.5)
Net earnings	254.3		222.7
Net earnings attributable to noncontrolling interests	(5.6)		(5.3)
Net earnings attributable to Snap-on Incorporated	$	248.7	$	217.4
Net earnings per share attributable to Snap-on Incorporated:
Basic	$	4.69	$	4.07
Diluted	4.60		4.00
Weighted-average shares outstanding:
Basic	53.0		53.4
Effect of dilutive securities	1.1		0.9
Diluted	54.1		54.3
Dividends declared per common share	$	1.62	$	1.42

See Notes to Condensed Consolidated Financial Statements.

3

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in millions)

(Unaudited)

 

	Three Months Ended
	April 1, 2023		April 2, 2022
Comprehensive income (loss):
Net earnings	$	254.3	$	222.7
Other comprehensive income (loss):
Foreign currency translation	18.1		(9.7)
Unrealized cash flow hedges, net of tax:
Reclassification of cash flow hedges to net earnings	(0.4)		(0.4)
Defined benefit pension and postretirement plans:
Amortization of net unrecognized losses	—		4.5
Income tax benefit	—		(1.1)
Net of tax	—		3.4
Total comprehensive income	272.0		216.0
Comprehensive income attributable to noncontrolling interests	(5.6)		(5.3)
Comprehensive income attributable to Snap-on Incorporated	$	266.4	$	210.7

See Notes to Condensed Consolidated Financial Statements.

4

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share data)

(Unaudited)

	April 1, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	833.8	$	757.2
Trade and other accounts receivable – net	782.4		761.7
Finance receivables – net	572.1		562.2
Contract receivables – net	105.8		109.9
Inventories – net	1,049.1		1,033.1
Prepaid expenses and other assets	138.0		144.8
Total current assets	3,481.2		3,368.9
Property and equipment:
Land	32.9		32.6
Buildings and improvements	438.4		434.7
Machinery, equipment and computer software	1,085.4		1,069.3
Property and equipment – gross	1,556.7		1,536.6
Accumulated depreciation and amortization	(1,040.4)		(1,024.0)
Property and equipment – net	516.3		512.6
Operating lease right-of-use assets	61.5		61.5
Deferred income tax assets	73.1		70.0
Long-term finance receivables – net	1,197.1		1,170.8
Long-term contract receivables – net	387.8		383.8
Goodwill	1,050.6		1,045.3
Other intangibles – net	273.3		275.6
Pension assets	71.8		70.6
Other assets	12.9		13.7
Total assets	$	7,125.6	$	6,972.8

See Notes to Condensed Consolidated Financial Statements.

5

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share data)

(Unaudited)

	April 1, 2023		December 31, 2022
LIABILITIES AND EQUITY
Current liabilities:
Notes payable	$	18.2	$	17.2
Accounts payable	283.1		287.0
Accrued benefits	65.3		58.6
Accrued compensation	68.6		98.6
Franchisee deposits	72.5		73.8
Other accrued liabilities	491.3		436.4
Total current liabilities	999.0		971.6
Long-term debt	1,184.0		1,183.8
Deferred income tax liabilities	85.3		82.1
Retiree health care benefits	22.9		23.4
Pension liabilities	72.7		78.6
Operating lease liabilities	44.9		44.7
Other long-term liabilities	84.4		85.1
Total liabilities	2,493.2		2,469.3
Commitments and contingencies (Note 14)
Equity
Shareholders’ equity attributable to Snap-on Incorporated:
Preferred stock (authorized 15,000,000 shares of $1 par value; none outstanding)	—		—
Common stock (authorized 250,000,000 shares of $1 par value; issued 67,450,776 and 67,444,966 shares, respectively)	67.5		67.4
Additional paid-in capital	500.2		499.9
Retained earnings	6,458.1		6,296.2
Accumulated other comprehensive loss	(510.6)		(528.3)
Treasury stock at cost (14,520,364 and 14,442,386 shares, respectively)	(1,905.0)		(1,853.9)
Total shareholders’ equity attributable to Snap-on Incorporated	4,610.2		4,481.3
Noncontrolling interests	22.2		22.2
Total equity	4,632.4		4,503.5
Total liabilities and equity	$	7,125.6	$	6,972.8

See Notes to Condensed Consolidated Financial Statements.

6

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Amounts in millions, except share data)

(Unaudited)

The following summarizes the changes in total equity for the three month period ended April 1, 2023:

	Shareholders’ Equity Attributable to Snap-on Incorporated
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interests		Total Equity
Balance at December 31, 2022	$	67.4	$	499.9	$	6,296.2	$	(528.3)	$	(1,853.9)	$	22.2	$	4,503.5
Net earnings for the three months ended April 1, 2023	—		—		248.7		—		—		5.6		254.3
Other comprehensive income	—		—		—		17.7		—		—		17.7
Cash dividends – $1.62 per share	—		—		(86.1)		—		—		—		(86.1)
Stock compensation plans	—		0.3		—		—		36.1		—		36.4
Share repurchases – 356,000 shares	—		—		—		—		(87.2)		—		(87.2)
Other	0.1		—		(0.7)		—		—		(5.6)		(6.2)
Balance at April 1, 2023	$	67.5	$	500.2	$	6,458.1	$	(510.6)	$	(1,905.0)	$	22.2	$	4,632.4

The following summarizes the changes in total equity for the three month period ended April 2, 2022:

	Shareholders’ Equity Attributable to Snap-on Incorporated
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interests		Total Equity
Balance at January 1, 2022	$	67.4	$	472.7	$	5,699.9	$	(343.9)	$	(1,714.2)	$	21.9	$	4,203.8
Net earnings for the three months ended April 2, 2022	—		—		217.4		—		—		5.3		222.7
Other comprehensive loss	—		—		—		(6.7)		—		—		(6.7)
Cash dividends – $1.42 per share	—		—		(75.7)		—		—		—		(75.7)
Stock compensation plans	—		2.0		—		—		8.8		—		10.8
Share repurchases – 136,000 shares	—		—		—		—		(28.8)		—		(28.8)
Other	—		—		(0.6)		—		—		(4.9)		(5.5)
Balance at April 2, 2022	$	67.4	$	474.7	$	5,841.0	$	(350.6)	$	(1,734.2)	$	22.3	$	4,320.6

See Notes to Condensed Consolidated Financial Statements.

7

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)

	Three Months Ended
	April 1, 2023		April 2, 2022
Operating activities:
Net earnings	$	254.3	$	222.7
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation	18.0		18.5
Amortization of other intangibles	6.9		7.2
Provision for losses on finance receivables	14.2		6.3
Provision for losses on non-finance receivables	5.0		3.8
Stock-based compensation expense	10.2		9.0
Deferred income tax provision (benefit)	(0.2)		2.3
Gain on sales of assets	(0.2)		(2.7)
Changes in operating assets and liabilities:
Trade and other accounts receivable	(22.9)		(53.1)
Contract receivables	0.2		9.7
Inventories	(13.2)		(61.7)
Prepaid expenses and other assets	1.7		1.9
Accounts payable	(0.5)		24.1
Accruals and other liabilities	28.1		5.9
Net cash provided by operating activities	301.6		193.9
Investing activities:
Additions to finance receivables	(257.1)		(205.5)
Collections of finance receivables	207.5		215.6
Capital expenditures	(23.0)		(20.2)
Disposals of property and equipment	0.5		3.8
Other	(0.8)		(0.3)
Net cash used by investing activities	(72.9)		(6.6)
Financing activities:
Net increase in other short-term borrowings	0.8		2.3
Cash dividends paid	(86.1)		(75.7)
Purchases of treasury stock	(87.2)		(28.8)
Proceeds from stock purchase and option plans	32.8		5.8
Other	(12.4)		(9.9)
Net cash used by financing activities	(152.1)		(106.3)
Effect of exchange rate changes on cash and cash equivalents	—		0.1
Increase in cash and cash equivalents	76.6		81.1
Cash and cash equivalents at beginning of year	757.2		780.0
Cash and cash equivalents at end of period	$	833.8	$	861.1
Supplemental cash flow disclosures:
Cash paid for interest	$	(13.6)	$	(13.8)
Net cash paid for income taxes	(13.3)		(18.0)

See Notes to Condensed Consolidated Financial Statements.

8

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Summary of Accounting Policies

Principles of consolidation and presentation

The Condensed Consolidated Financial Statements include the accounts of Snap-on Incorporated and its wholly owned and majority-owned subsidiaries (collectively, “Snap-on” or the “company”). These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included in Snap-on’s 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 year end”). The company’s 2023 fiscal first quarter ended on April 1, 2023; the 2022 fiscal first quarter ended on April 2, 2022. The company’s 2023 and 2022 fiscal first quarters each contained 13 weeks of operating results. Snap-on’s Condensed Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the Condensed Consolidated Financial Statements for the three month periods ended April 1, 2023, and April 2, 2022, have been made. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

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 9 for further information on financial instruments.

New Accounting Standards

On January 1, 2023, the beginning of Snap-on’s 2023 fiscal year, the company adopted ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty and eliminates certain current recognition and measurement accounting guidance. This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. The adoption of this ASU did not have a significant impact on the company’s Condensed 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.

9

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Revenue Disaggregation: The following table shows the consolidated revenues by revenue source:

	Three Months Ended
(Amounts in millions)	April 1, 2023		April 2, 2022
Revenue from contracts with customers	$	1,176.5	$	1,091.9
Other revenues	6.5		5.9
Total net sales	1,183.0		1,097.8
Financial services revenue	92.6		87.7
Total revenues	$	1,275.6	$	1,185.5

Snap-on evaluates the performance of its operating segments based on segment revenues, including both external and intersegment net sales, and segment operating earnings. Snap-on accounts for both intersegment 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 following tables represent external net sales disaggregated by geography, based on the customers’ billing addresses:

	For the Three Months Ended April 1, 2023
	Commercial		Snap-on		Repair Systems
	& Industrial		Tools		& Information		Financial				Snap-on
(Amounts in millions)	Group		Group		Group		Services		Eliminations		Incorporated
Net sales:
North America*	$	137.6	$	473.9	$	281.8	$	—	$	—	$	893.3
Europe	75.0		35.7		63.2		—		—		173.9
All other	66.0		27.4		22.4		—		—		115.8
External net sales	278.6		537.0		367.4		—		—		1,183.0
Intersegment net sales	85.2		—		79.2		—		(164.4)		—
Total net sales	363.8		537.0		446.6		—		(164.4)		1,183.0
Financial services revenue	—		—		—		92.6		—		92.6
Total revenue	$	363.8	$	537.0	$	446.6	$	92.6	$	(164.4)	$	1,275.6

	For the Three Months Ended April 2, 2022
	Commercial		Snap-on		Repair Systems
	& Industrial		Tools		& Information		Financial				Snap-on
(Amounts in millions)	Group		Group		Group		Services		Eliminations		Incorporated
Net sales:
North America*	$	113.7	$	447.8	$	242.8	$	—	$	—	$	804.3
Europe	81.8		40.1		61.9		—		—		183.8
All other	65.7		24.2		19.8		—		—		109.7
External net sales	261.2		512.1		324.5		—		—		1,097.8
Intersegment net sales	78.9		—		73.7		—		(152.6)		—
Total net sales	340.1		512.1		398.2		—		(152.6)		1,097.8
Financial services revenue	—		—		—		87.7		—		87.7
Total revenue	$	340.1	$	512.1	$	398.2	$	87.7	$	(152.6)	$	1,185.5
* North America is comprised of the United States, Canada and Mexico.

10

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The following tables represent external net sales disaggregated by customer type:

	For the Three Months Ended April 1, 2023
	Commercial		Snap-on		Repair Systems
	& Industrial		Tools		& Information		Financial				Snap-on
(Amounts in millions)	Group		Group		Group		Services		Eliminations		Incorporated
Net sales:
Vehicle service professionals	$	21.1	$	537.0	$	367.4	$	—	$	—	$	925.5
All other professionals	257.5		—		—		—		—		257.5
External net sales	278.6		537.0		367.4		—		—		1,183.0
Intersegment net sales	85.2		—		79.2		—		(164.4)		—
Total net sales	363.8		537.0		446.6		—		(164.4)		1,183.0
Financial services revenue	—		—		—		92.6		—		92.6
Total revenue	$	363.8	$	537.0	$	446.6	$	92.6	$	(164.4)	$	1,275.6

	For the Three Months Ended April 2, 2022
	Commercial		Snap-on		Repair Systems
	& Industrial		Tools		& Information		Financial				Snap-on
(Amounts in millions)	Group		Group		Group		Services		Eliminations		Incorporated
Net sales:
Vehicle service professionals	$	23.9	$	512.1	$	324.5	$	—	$	—	$	860.5
All other professionals	237.3		—		—		—		—		237.3
External net sales	261.2		512.1		324.5		—		—		1,097.8
Intersegment net sales	78.9		—		73.7		—		(152.6)		—
Total net sales	340.1		512.1		398.2		—		(152.6)		1,097.8
Financial services revenue	—		—		—		87.7		—		87.7
Total revenue	$	340.1	$	512.1	$	398.2	$	87.7	$	(152.6)	$	1,185.5

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.

11

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

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 range from one month up to 60 months. Snap-on had approximately $180.0 million of long-term contracts that have fixed consideration that extends beyond one year as of April 1, 2023. Snap-on expects to recognize approximately 70% of these contracts as revenue by the end of fiscal 2024, an additional 25% by the end of fiscal 2026, and the balance thereafter. 

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 $65.7 million and $63.3 million at April 1, 2023, and December 31, 2022, respectively. 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 Condensed Consolidated Balance Sheets. During the three months ended April 1, 2023, Snap-on recognized $34.7 million of revenue that was included in the $63.3 million contract liability balance at December 31, 2022, which was primarily from the amortization of software subscriptions, extended warranties and other subscription agreements.

Note 3: Receivables

Trade and other accounts receivable: Snap-on’s trade and other accounts receivable primarily arise from the sale of tools, diagnostics, and equipment products to a broad range of industrial and commercial customers and to Snap-on’s independent franchise van channel with payment terms generally ranging from 30 to 120 days.

The components of Snap-on’s trade and other accounts receivable as of April 1, 2023, and December 31, 2022, are as follows:

(Amounts in millions)	April 1, 2023		December 31, 2022
Trade and other accounts receivable	$	813.6	$	792.8
Allowances for credit losses	(31.2)		(31.1)
Total trade and other accounts receivable – net	$	782.4	$	761.7

The following is a rollforward of the allowances for credit losses related to trade and other accounts receivable for the three months ended April 1, 2023, and April 2, 2022:

	Three Months Ended
(Amounts in millions)	April 1, 2023		April 2, 2022
Allowances for credit losses:
Beginning of period	$	31.1	$	27.3
Provision for credit losses	4.7		3.7
Charge-offs	(4.8)		(3.0)
Recoveries	—		0.1
Currency translation	0.2		0.3
End of period	$	31.2	$	28.4

12

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Finance and contract receivables: Snap-on Credit LLC (“SOC”), the company’s financial services operation in the United States, originates extended-term finance and contract receivables on sales of Snap-on’s products sold through the U.S. franchisee network and to certain other customers of Snap-on; Snap-on’s foreign finance subsidiaries provide similar financing internationally. Interest income on finance and contract receivables is included in “Financial services revenue” on the accompanying Condensed Consolidated Statements of Earnings.

Finance receivables are comprised of extended-term 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.

Contract receivables, with payment terms of up to 10 years, are comprised of extended-term payment contracts to a broad base of customers worldwide, including shop owners, both independents and national chains, for their purchase of tools, diagnostics, and equipment products, as well as extended-term contracts to franchisees to meet a number of financing needs, including working capital loans, loans to enable new franchisees to fund the purchase of the franchise and van leases, or the expansion of an existing franchise. Finance and contract receivables are generally secured by the underlying tools, diagnostics and/or equipment products financed and, for contracts to franchisees, other franchisee assets.

The components of Snap-on’s current finance and contract receivables as of April 1, 2023, and December 31, 2022, are as follows:

(Amounts in millions)	April 1, 2023		December 31, 2022
Finance installment receivables	$	589.2	$	578.6
Finance lease receivables, net of unearned finance charges of $0.5 million and $0.5 million, respectively	2.9		3.2
Total finance receivables	592.1		581.8
Contract installment receivables	46.2		51.3
Contract lease receivables, net of unearned finance charges of $19.3 million and $19.1 million, respectively	61.3		60.3
Total contract receivables	107.5		111.6
Total	699.6		693.4
Allowances for credit losses:
Finance installment receivables	(20.0)		(19.5)
Finance lease receivables	—		(0.1)
Total finance allowance for credit losses	(20.0)		(19.6)
Contract installment receivables	(0.8)		(0.8)
Contract lease receivables	(0.9)		(0.9)
Total contract allowance for credit losses	(1.7)		(1.7)
Total allowance for credit losses	(21.7)		(21.3)
Total current finance and contract receivables – net	$	677.9	$	672.1
Finance receivables – net	$	572.1	$	562.2
Contract receivables – net	105.8		109.9
Total current finance and contract receivables – net	$	677.9	$	672.1

13

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The components of Snap-on’s finance and contract receivables with payment terms beyond one year as of April 1, 2023, and December 31, 2022, are as follows: 

(Amounts in millions) April 1,
2023 December 31, 2022