Investor Overview April 2018
CAUTIONARY STATEMENT Information included in this presentation may contain statements, including earnings projections, that are forwardlooking in nature and, accordingly, are subject to risks and uncertainties regarding Snapon 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 Snapon or its management; (iii) are specifically identified as forwardlooking; or (iv) describe Snapon s or management s future outlook, plans, estimates, objectives or goals, are forwardlooking 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 forwardlooking statements. Factors that may cause the company s actual results to differ materially from those contained in the forwardlooking 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 10K for the fiscal year ended December 30, 2017 and under Management s Discussion and Analysis of Financial Condition and Results of Operations Caution Regarding ForwardLooking Statements in its fiscal 2018 first quarter report on Form 10Q, which are incorporated herein by reference. Snapon disclaims any responsibility to update any forwardlooking statement provided during this presentation, except as required by law. 2 This presentation includes certain nongaap 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 nongaap measures is included in Snapon s Form 10K and earnings press releases available at snapon.com. See appendix for reconciliation of nongaap measures to GAAP counterparts.
3 SNAPON OVERVIEW Founded on innovation in 1920 Makes work easier for serious professionals performing critical tasks Unique brand strength 12,600 associates worldwide Serves professionals in over 130 countries 2017 net sales: $3.7 billion NYSE: SNA / S&P 500 $8.3B Market Cap 2.2% Cash Dividend Yield Dividends paid without interruption or reduction since 1939
SNAPON IS... Rooted in the Dignity of Work Driven by the Needs of the Serious Guided with the Insight Shaped by Experience 4
5 UNIQUE PRODUCTIVITY SOLUTIONS
6 UNIQUE BRAND STRENGTH
ORGANIZED TO REACH OUR PRIMARY CUSTOMERS: OPERATING SEGMENTS Repair Systems & Information Group (RS&I): Vehicle repair shop owners and managers 30% Financial Services 6% 28% 36% Commercial & Industrial Group (C&I): Professionals in a broad range of critical industries 2017 revenues by segment Snapon Tools Group (Franchised Van Business): Vehicle repair technicians 7
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 U.S. VEHICLE AGING DRIVES SERVICE GROWTH Age of U.S. Vehicles Age in Years 14 13 12 11 10 9 8 7 6 5 4 Average Vehicle Age 19802017 2017 11.7 years 8 Source: HIS Markit 2017
VEHICLE TECHNOLOGY & COMPLEXITY PROVIDES OPPORTUNITY Increasing vehicle complexity Testing and reprogramming requirements expanding Repair information growing Vehicle repairs increasingly require use of diagnostics Productive shop management rising in importance Emerging vehicle technologies create new solution needs 9
The Way Forward: Runways for Improvement Runways for Growth 10
RUNWAYS FOR IMPROVEMENT: SNAPON VALUE CREATION SafetyCell Design Quality Customer Connection Innovation Rapid Continuous Improvement 11
SNAPON VALUE CREATION: SAFETY Safety Incident Rate 92% Reduction 2017 77 Locations with No Lost Time Incidents 12 Associates are 92% less likely to experience a safety incident today than in 2004
SNAPON VALUE CREATION: QUALITY Snapon rated most preferred brand by U.S. auto technicians in multiple product categories of the latest Frost & Sullivan survey, including: 65% 56% 50% 63% 9% 4% 9% 9% 13 Frost & Sullivan 2017 United States Automotive Technicians Choice: Opportunities in the Automotive Tools Market
SNAPON VALUE CREATION: CUSTOMER CONNECTION ~4,900 mobile stores Multiple direct sales forces ~700,000 N. American and European repair shops; repair networks in emerging markets growing rapidly ~1 billion repair records in database ~2,500 vocational schools ~38,000 visitors to Snapon s Innovation Works 14 We Directly Observe Customers and Workplaces
SNAPON VALUE CREATION: INNOVATION NEW PRODUCT AWARDS AND SUCCESSES 15 We Translate Insights Into Innovation
SNAPON VALUE CREATION: RAPID CONTINUOUS IMPROVEMENT (RCI) Operating margin before financial services up 1,260 bps* since 2005 16 * As adjusted to exclude certain legal charges. See appendix "Reconciliation of nongaap Financial Measures" for further explanation.
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 Areas 17
SNAPON HERITAGE 18 Selling Great Tools Through Vans to Vehicle Technicians
SNAPON 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 19
ENHANCE THE FRANCHISE NETWORK REACH MORE TECHNICIANS 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 20
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 21
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 22
BUILD IN EMERGING MARKETS Create manufacturing capacity Establish distribution and sales reach Launch new product lines 23
NET SALES AND OI MARGIN TREND $ Billions 4.00 $2.85 3.00 14.5% 2.00 $2.94 $3.06 15.2% 15.8% $3.69 $3.43 $3.28 $3.35 19.3%* 18.1% 19.3% 18.0% 16.6% 20% 15% 1.00 10% 0.00 2011 2012 2013 2014 2015 2016 2017 5% Net Sales Operating Margin Before Financial Services (as % of net sales) 24 *As adjusted to exclude certain legal charges. See appendix "Reconciliation of nongaap Financial Measures" for further explanation. Historical data reflects the 2018 adoption of ASU No. 201707, Compensation Retirement Benefits (Topic 715).
DILUTED EARNINGS PER SHARE 12.00 9.00 $9.20 $10.12* $9.52 6.00 $7.14 $8.10 3.00 $4.71 $5.20 $5.93 0.00 2011 2012 2013 2014 2015 2016 2017 Diluted Earnings Per Share Adjusted Diluted Earnings Per Share 25 * As adjusted to exclude certain legal and tax charges. See appendix "Reconciliation of nongaap Financial Measures" for further explanation.
FINANCIAL SERVICES $ Millions $2,000 $1,591 $1,815 $2,002 $217.5 $240 $200 $1,600 $1,200 $800 $400 $398 ($9.1) $733 $935 $14.4 $72.9 $1,084 $106.7 $1,232 $125.7 $1,385 $149.1 $170.2 $198.7 $160 $120 $80 $40 $0 $0 H2 2009 2010 2011 2012 2013 2014 2015 2016 2017 ($40) Ending gross onbook portfolio Financial Services Operating Earnings* Financial Services is both strategically important and a strong contributor to company earnings; unique aspects of model drive portfolio performance and differentiate from other captive credit companies 26 * 2011 excludes $18 million arbitration settlement gain; including settlement gain, Financial Services operating earnings was $90.9 million
INCREASED DIVIDENDS $3.50 $3.00 $2.95 $2.50 $2.20 $2.54 $2.00 $1.85 $1.50 $1.22 $1.30 $1.40 $1.58 $1.00 $0.50 $0.00 2010 2011 2012 2013 2014 2015 2016 2017 27 15.5% Quarterly dividend increase November 2017; Dividends paid without interruption or reduction since 1939
Q1 2018 SUMMARY RESULTS Sales up 5.5%; Organic Sales up 0.8%; EPS up 18.0%; Adjusted EPS up 16.7%* ($ in millions) Q1 2018 Q1 2017 Change Net Sales $ 935.5 $ 887.1 5.5% OI before financial services $ 177.7 $ 170.2 4.4% OI margin before financial services 19.0% 19.2% 20 bps OI from financial services $ 56.9 $ 52.5 8.4% OI margin consolidated 23.0% 23.1% 10 bps Diluted EPS $ 2.82 $ 2.39 18.0% Adjusted diluted EPS* $ 2.79 $ 2.39 16.7% 28 *As adjusted to exclude net debt items and tax charge
SNAPON INVESTMENT RATIONALE 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 Snapon Value Creation Substantial runways for growth Enhance the franchise network Expand with repair shop owners and managers Extend in critical industries Build in emerging markets Priorities for capital allocation include investing in our business (organically and through acquisition); capital returned to shareholders through both dividend and share repurchase 29 Targeting organic sales growth in the midsingle digits and continuing operating margin improvement
Investor Overview April 2018
APPENDIX: RECONCILIATION OF NONGAAP FINANCIAL MEASURES AS REPORTED Fourth Quarter Full Year ($ in millions, except per share data unaudited) 2017 2016 2017 2016 Charges related to judgments in litigation matters that are being appealed ( legal charges ) Pretax legal charges Income tax expense Legal charges, net of tax $ 30.9 (11.8) $ 19.1 $ $ $ 45.9 (17.5) $ 28.4 $ $ Weightedaverage shares outstanding diluted 57.9 59.3 58.6 59.4 Diluted EPS legal charges $ 0.33 $ $ 0.48 $ Charge related to implementation of tax legislation ( tax charge ) Tax charge $ 7.0 $ $ 7.0 $ Weightedaverage shares outstanding diluted 57.9 59.3 58.6 59.4 Diluted EPS tax charge $ 0.12 $ $ 0.12 $ Q42017 Quarterly Review 2018 Snapon Incorporated
APPENDIX: RECONCILIATION OF NONGAAP FINANCIAL MEASURES (CONTINUED) ADJUSTED INFORMATION NONGAAP Fourth Quarter Full Year ($ in millions, except per share data unaudited) 2017 2016 2017 2016 Operating earnings before financial services As reported Legal charges As adjusted to exclude legal charges $ 157.7 30.9 $ 188.6 $ 176.1 $ 176.1 $ 664.0 45.9 $ 709.9 $ 655.5 $ 655.5 Operating earnings before financial services as a percentage of sales As reported As adjusted to exclude legal charges 16.2 % 19.4 % 19.8 % 19.8 % 18.0 % 19.3 % 19.1 % 19.1 % Operating earnings As reported Legal charges As adjusted to exclude legal charges $ 212.1 30.9 $ 243.0 $ 227.7 $ 227.7 $ 881.5 45.9 $ 927.4 $ 854.2 $ 854.2 Operating earnings as a percentage of revenue As reported As adjusted to exclude legal charges 20.1 % 23.0 % 23.6 % 23.6 % 22.0 % 23.2 % 23.0 % 23.0 % Q42017 Quarterly Review 2018 Snapon Incorporated
APPENDIX: RECONCILIATION OF NONGAAP FINANCIAL MEASURES (CONTINUED) ADJUSTED INFORMATION NONGAAP Fourth Quarter Full Year ($ in millions unaudited) 2017 2016 2017 2016 Net earnings attributable to Snapon Incorporated As reported Legal charges, after tax Tax charge As adjusted to exclude legal charges and tax charge $ 129.5 19.1 7.0 $ 155.6 $ 146.3 $ 146.3 $ 557.7 28.4 7.0 $ 593.1 $ 546.4 $ 546.4 Diluted EPS As reported Legal charges, after tax Tax charge As adjusted to exclude legal charges and tax charge $ 2.24 0.33 0.12 $ 2.69 $ 2.47 $ 2.47 $ 9.52 0.48 0.12 $ 10.12 $ 9.20 $ 9.20 Effective tax rate As reported Legal charges Tax charge As adjusted to exclude legal charges and tax charge 33.0 % 1.2 % 3.6 % 30.6 % 30.8 % 30.8 % 31.1 % 0.4 % 0.9 % 30.6 % 31.0 % 31.0 % Q42017 Quarterly Review 2018 Snapon Incorporated
APPENDIX: RECONCILIATION OF NONGAAP FINANCIAL MEASURES (CONTINUED) AS REPORTED 1st Quarter ($ in millions, except per share data unaudited) 2018 2017 Debtrelated items ( net debt items ) Gain on settlement of treasury lock (A) Gain on settlement of treasury lock Income tax expense Gain on settlement of treasury lock, after tax $ 13.3 (3.3) $ 10.0 $ $ Weightedaverage shares outstanding diluted 57.8 59.3 Diluted EPS gain on settlement of treasury lock $ 0.17 $ Loss on early extinguishment of debt (B) Loss on early extinguishment of debt Income tax benefit Loss on early extinguishment of debt, after tax $ (7.8) 1.9 $ (5.9) $ $ Weightedaverage shares outstanding diluted 57.8 59.3 Diluted EPS loss on early extinguishment of debt $ (0.10) $ Net debt items (A + B) Net debt items Income tax expense Net debt items, after tax $ 5.5 (1.4) $ 4.1 $ $ Weightedaverage shares outstanding diluted 57.8 59.3 Diluted EPS net debt items $ 0.07 $ Q42017 Quarterly Review 2018 Snapon Incorporated
APPENDIX: RECONCILIATION OF NONGAAP FINANCIAL MEASURES (CONTINUED) ADJUSTED INFORMATION NONGAAP 1st Quarter ($ in millions unaudited) 2018 2017 Net earnings attributable to Snapon Incorporated As reported Net debt items, after tax Tax charge As adjusted to exclude net debt items and tax charge Diluted EPS As reported Net debt items, after tax Tax charge As adjusted to exclude net debt items and tax charge Effective tax rate As reported Tax charge As adjusted to exclude net debt items and tax charge $ 163.0 (4.1) 2.6 $ 161.5 $ 2.82 (0.07) 0.04 $ 2.79 26.2 % 1.2 % 25.0 % $ 141.6 $ 141.6 $ 2.39 $ 2.39 30.7 % 30.7 % Q42017 Quarterly Review 2018 Snapon Incorporated