Snap-On Inc at Bank of America Global Industrials Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : And so you've touched on this focus on the technician, these critical roles that they play. There's a lot of tools companies out there but how is Snap-on unique? And how do you see yourself in our competitive landscape? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance Because I said we don't cater to do-it-yourself, the one advantage. The disadvantage is you don't get scale. Advantage is you don't have scale. So that means you can do more bespoke, unique smaller lot sizes. You can cater to the more nuanced needs that might exist in different businesses. The example I've been using today -- and again, I'm not an engineer, so I don't know this by trade, but the needs of a mining company in Antofagasta, Chile, that's a mile underground of the copper mines, are different than the needs outside of Perth when you're doing open pit mining and moving major large apparatus on the surface of the earth. There's a difference between maintaining or decommissioning the North Sea oil platforms and making sure there's no leakage on the ocean floor as compared to what's needed when you're putting up new oil platforms into the Gulf of Mexico or North Sea, which we don't do too much of anymore. So because REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : Makes sense. And you also have this sort of unique approach to the market where you've got franchisees, direct-to-customer in other markets. You've also got a financing arm. Could you touch on how that financing arm fits into Snap-on's overall strategy and supports both the franchisee and/or direct market sales? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance I'd be careful about scaring everybody, financing company. If you're following industrials, financing companies are not so common. Snap-on existed in a way, shape and form really since the 1930s. If you look at the pictures of the trucks in our museum, earn now, pay later. I mean this is in vogue days. Everybody's talking about subscription-based services. When you go with a concept, earn now pay later -- and I'm not talking about payday loans, but like that, you're selling high-priced tools. Well, how do you sell a $100 wrench in 1930? Maybe it's a high price point for that time. But you sell it by saying it's $5 a week. That's how you get it across. Eventually, the price point gets to a precipice where you need more duration. And that's where the financing company comes in. So we have a financing company to help enable the franchisees and their customers, they're the actual decision-makers as to when to use financing. But when price points start to get higher, things like a tool storage box, a median price of a tool storage box at Snap-on with nothing in it, it's about USD8,000. I think they're not cheap. So you'll find that the poster child of what gets written on extended credit is tool storage boxes. So mix, off the back of the van -- since we're going down this path and I'm talking a lot. Off the back of the truck, about 70% of what the franchisees sell is financed by themselves with their own working capital. These are the products that are selling X amount per week over up to 15 weeks. 30% of the time, again, more less, they're selling things that require longer duration. Now the longest loan that Snap-on credit offers is up to five years and the average loan in the portfolio right now is a little bit over four years. That number has been -- the 5-year duration, that maximum has been in place for 20-plus years now. So that kind of gives you a little bit of color. But what's important about this -- I don't want to scare everybody in the room. Before the word subprime was ever invented, that describes the technician. That is the financial profile of a technician. In our databases, 63% of our customers would meet the definition of a FICO score that's in the subprime or lower category. Because of the nature how auto repair work is organized -- and until you come into this room, you wouldn't have thought of it. The technician owns their own tools that only exist in certain markets of the world, unfortunately, United States, Canada, United Kingdom, and Australia. Common theme is the British Empire is in there somewhere. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : And over the past year or so, we've seen organic growth be impacted in tool [spending] a little bit. And despite sentiment being fairly positive, the shops are full, there's a lot of work to be done, technicians have been pulling back on spend for those big-ticket items. Have you seen any change with that with regards to the backdrop? Anything in terms of purchasing attitudes, just given some of that? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance I'll talk more at the macro level. And again, I'm not ducking the question. We don't give current guidance. I love that fact, actually we don't give current guidance. We give long-term guidance. But you could see that in the fourth quarter, and you can ask yourself how have things changed since the end of the fourth quarter. Technician confidence was weak. And when things are weak and you're talking to your friends that are attending the Bank of America Conference, if they're giving you bullish interpretations and saying, you're more apt to make major investments. If your friends from Bank of America saying, I don't know what the saber rattling is and 200-some people die today in Gaza and the war is no closer to resolution. And now you're firing at Yemen -- and I don't know if that's indiscriminate firing or it's targeted firing. The world is still a little unstable is the point I'm getting at. So confidence has probably not gotten better over recent times from a macro perspective. The good news is that there's plenty of work. You can go to any skilled labor application, whether it be in a factory, whether it be welders, machine operators, CNC machine maintenance people or technicians in an auto garage or at the tarmac at Heathrow, there's a need across the board for more skilled people. The governments of the world are starting to talk about this more surgically, saying we need to have more technical education. We have to make technical education and trades more popular for people to go into. Everybody wanted their children once upon a time to go into academia, and they all want to go out and become investment bankers and things of that nature, but not everybody can do that. And not everybody can be an art historian, and there's nothing wrong in being an art historian, but it is a number of people that actually know how to work the trades and you have to make it popular and have them full of pride, like it did back in 1920 when people would be surgical felt, the green tools, whatever you want to call it, and take pride in what they do. And that's kind of our calling, to make that popular again. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : And when we think about these larger ticket items that technicians might be putting off, typically, everyone thinks of storage, what else might be included in that? And as a technician, from their standpoint, when in their careers are they purchasing larger things like storage? How often can -- or how long can they really put it off for, given the need to the interim? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance Well, Snap-on on stuff last a long time, and in fact, our tools are guaranteed for life. So the hard iron sockets, wrench supplier, screw drivers, those are guaranteed for life. So unless you lose it, you're going to get that replaced for free. When it comes to power tools, there's again, variations on power tools. And there's specialty items. Now if you're doing more work in a lot of these cars is the more they get computerized, you're working sometimes under dashboards, are working on more frail componentry. So you need smaller power tools, they get into nooks and crannies and work in a controlled torque environment so you don't strip the fasteners that you cannot even see sometimes. So you're getting variations -- if you get into battery operator vehicles, I think there's 90% more faster. It's mostly associated with the battery pack. But all these items require a wider array of nuanced tools that you don't even really need them. I can't postpone it because I came to work this morning thinking I could fix every car that came into my shop, more or less. Now Snap-on shows up with some new ideas, some new invention, says you can do this more productively. Well, if I only see a certain vehicle once a month, I'd say, I'll struggle through it. I'll take the extra 15 minutes, 1 hour or 2, whatever it is. But if I see this vehicle with regularity, I say, wow, this could be a real time saver. I'll get investment on -- investment return on this, plus I like to add to my collection of tools, I think you meet with success, but you need to have, one, the person convinced that your tool delivers the productivity that you promised. I think we're pretty good at being able to demonstrate that, but it takes shoe leather to get out there in front of people and show them the difference. And you need to have -- people have a reasonable level of confidence to say, I think that demand is going to keep coming into my shop or out of the tarmac or whatever it would be. And therefore, I'll get a return on this. It's not going to be, all of a sudden, I bought this and I don't need it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : Makes sense. And just over the long term, Snap-on has been able to grow earnings high-teens outside the pandemic on, call it, mid- to high single-digit revenue growth. And investor expectations seem to be well below that historical range. Today, where do you see the most opportunity for growth? And what verticals are you most excited about? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance Yeah. It's hard to read as to how people arrive at -- I think the P/E ratio is what it is because of the mathematics, I don't know if people can target a P/E ratio. I think sometimes Snap-on can get lumped in with a more casual observation that's associated with auto manufacturing. And autos, broadly speaking, usually are signed lower multiples because they had such cyclicality. But we're really not so dependent on new car manufacturing. Actually, we're not really at all. We don't make parts. So even if people say in the world of electric vehicles, there's less parts, components, really, it's time and where we can save people time becomes more relevant. The important thing, though, that you touched on a very good point, we actually shrank last year by 9/10 of 1% with our overall growth rate for the year, but our margins expanded. And we believe -- and this becomes a little bit more doable when you're vertically integrated. There's always things that behind the scenes can be improved. You can't do it necessarily linearly every quarter. My boss, our CEO, would expect that. So we aspire to that, but it's hard to do it every quarter. But if you look at a tunnel of time, since 2005, Snap-on had an operating income as a percent of 6.5%. Now this past year was 22.7%. That's without the financial services, it would actually be higher if you had financial services on top of that. So we think there's ways to improve. I think people see the absolutes and they might wonder, is that as good as it gets? Can it be better? We think it can. We don't have a declared final target. But we think we have a great brand. We've got a great history, great culture, not just a Snap-on brand, but some of the brands we acquired over the years, like Bahco, which is very big in the European theater and in emerging markets and Car-O-Liner, when it comes to collision. And John Bean and Hofmann, which are brands that are known in the world of alignment. We think they all bring unique characteristics. So why should we not aspire to have margins equal or better than the highest industrials? And we don't have a declared benchmark, but we know there are certain industrials that have in the high 20s. So I think some people look at the 22% or so and say, no, maybe it's maxed out, so I got to go with strictly growth. And Snap-on and auto repair, our MRO, is never going to be as sexy as the next AI invention, yet behind the scenes, there are elements of machine learning that go into the products and the tools and the things that we do for a living. But I don't want to get too dramatic on playing the AI card, but we use machine learning and sophistication when it comes to databases that are used to predict what might be the most likely root cause of a problem on a car. We have to buy the book, steps one, two, three, four, five, six, seven, eight that the OEM might prescribe. But then you got predictive failures. So we have -- well, I call that more machine learning than anything else. So again, I don't think we have the sexy growth story necessarily. And I think it's a consistent story. And even in the great financial recession, if you look at our margin performance back -- just before we entered, it was 12.2%. Yes, it declined during the great financial recession to 9.9%. So while that was a disappointment, especially going below 10%, our boss wasn't happy with that, it wasn't end of life. So we think we know how to deal with these traumas that are going to present themselves over time, and they will. But again, MRO, repair criticality is enduring. And therefore, we think there's going to be a continuous demand for the products and our services. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : You've touched on some of these data products and other items. Turning to RS&I that sells into the dealers, lots of those larger payer systems. Have you seen a change in the backdrop there in terms of dealers willing to spend on systems just given the more volatile backdrop? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance They have actually been -- well, sometimes it's prescribed and related to new car platforms that roll out. So when there's a lot of new activity, it forces sometimes, for lack of a better word, dealers to make investments. So for example, when a Cadillac declares, we're going to have X amount of sales that are going to be electric. They got to have a charging station in the front of the dealership for their customers. They have to have at least one in the back for their technicians. We don't make charging stations, but we might facilitate the industries that sell into that and help dealerships remodel, for lack of a better word, their bays, their appearance and the investments that go along with them. Some of those programs have been quite dynamic of late in our Equipment Services Division has very strong 2024 and that still seems to have a good order book as we enter 2025. So you can get variations, but still the need to deal with the ever complex array of cars that are coming is there's no signs it's going to abate because cars keep getting more complicated.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : And you mentioned -- you touched on the fact that you've historically had a bit more limited penetration in some of these commercial markets. Going forward, how does Snap-on look to expand? And maybe why were those barriers there versus -- Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance The pacing element is observation of the work, just like it was back in 1920. How do you get out and actually observe the work? Anybody, as I said, can survey people but you really need to see what's really wrong. You have to be at the workplace. You have to invest the time and effort and energy. And then how can you take back to your engineering capabilities the problem that you observed in the field and what you might do to remedy it? That's the solution. It's the same on heavy duty. It's a matter of not treating the segment as a byproduct. oh, I have some products that overlap. Let me solve here. That will take you a way. That will take you even, oh I have wrenches that are used, they can repair a car. Oh, they can repair an aircraft up to this extent. But if you really want to get serious about it and build the segment, you have their approach it more surgically and structurally and cater then to those nuances. And again, servicing a truck is different than servicing a tractor and servicing, as I mentioned, a mine in country A versus country B can be different. And catering to those variations is what Snap-on does. So even though our absolute level of sales is one-third of size or some others in the industry, we might have 3, 4 times the stock keeping units.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : And you touched on balance sheet. You've got a really strong balance sheet that affords you quite a bit of optionality. The last few years, you've seen quite a bit of cash flow build. And you've been consistent on the dividend in terms of growth. Outside of that, what do you see as the priorities for use of cash? And has that changed at all these last few years? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance We're very working capital intensive. Number one, I mentioned organic growth. That's what most companies strive to the most because they're most comfortable with it. Today, Snap-on invest about 32% of working capital, and 32% of sales is in working capital. There's not like a law that says it should be that high. I tell people, can it be better? Yes, but I ask you not to model it. So yes, you can produce projections that cash flow could be better. But we get compensated on our operating income in relation to return on net operating assets. So when we make an investment in inventory in particular or sales terms, we look at the returns that they generate. And we're comfortable that our product doesn't obsolesce quite the way many other industries do. We're not subject to the expression -- to use fashion sense, our product doesn't go out of style. The iron lasts forever, as I said, it's guaranteed forever. So sockets, wrenches, pliers, you can put those on the shelves and not really worry too much about them. Electronics will deteriorate over time. Batteries will become weaker over a one-, two-, three-year period. And electronics, you always have to look at what's the next great invention that's coming because you can supersede your own offering. So then you got to be a little bit more mindful of it. But working capital has been a pretty safe bet. And in times like these, when people are threatening tariff A versus tariff B, you want to be flexible and nimble and have second sources of supply. The world learned that following COVID, the value of not being just in time inventory techniques. So while we're not against any of those principles, we find by maximizing working capital, turnover is not necessarily the way of maximizing profitability. So that's one, organic growth. Number two, M&A, it'd be the most -- second most desirable way to grow in the type of industries that are coherent to what we do. So we're not looking to reinvent the company. We're not looking to add diversification. We're trying to go to what the industry might call bolt-on acquisitions. We use the word coherent acquisitions. And that would be the next objective. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : And how should we think about Snap-on's product development cycle? You've touched on every new generation of vehicle having new problems that need to be solved and Snap-on developing the tools to solve those. So how should we think about just the refresh of the portfolio and maybe how development varies between hand tools and power tools? Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance Yeah. We retire some products over time, but more or less, we're growing consistently in our number of SKUs. So we're not looking to skinny down the line for cost savings. So we found that we have gotten a return on variation. The nice thing is that when you're vertically integrated, a lot of the technologies in the world are coming your way and enabling companies to make more rapid changeover of tools, dies, products that allow you to more cost-effectively run smaller batch sizes. Scale helps everybody. And if you can make a 1,000 of 1 thing, the factories always love it, even at Snap-on. But then how do you make things in units of 5 or 10 or 1 even, how do you do that cost effectively? We try to look at that. But technology is going our way in terms of enabling factories to be more flexible, capable. So not only do you get raw capacity expansion when you make investments in new tools and machinery, but we also get more flexibility where operators can run maybe five machines in a cell, where before, you'd have classically one operator, one machine, one operator, very redundant work, very boring work. Now it was a little bit more intriguing. The skill level of the person has to be higher. We do a lot of that teaching internally. But it makes the job more interesting. When jobs are more interesting, people are more productive, more creative and you get better quality, I think. I think. So we try to approach it in that fashion, but the need for new tools and the idea is incubation period, six months typically, but if there's a immediate and acute need, can you do things more rapidly? Some things take longer to develop, yes. Like everybody else when it comes to our diagnostic line of electronics, we have things in the back shelf and you try to say, when should I release that? If I announce it too soon, do I dry hole my current offering? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : And thinking high level, something that's been in the news quite a bit and front of mind for investors has been tariffs and the landscape has been shifting quite rapidly. Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance Really?

Question: Sherif El-Sabbahy - BofA Global Research - Analyst : Thank you. Well, with that, I think we're just about out of time. Thank you so much for joining us today. Aldo Pagliari - Snap-On Inc - Chief Financial Officer, Senior Vice President - Finance Okay. Thank you. DISCLAIMER Refinitiv reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Briefs are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT BRIEFS REFLECTS REFINITIV'S SUBJECTIVE CONDENSED PARAPHRASE OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES REFINITIV OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT BRIEF. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.