Snap On Inc. is a 100 year old American manufacturer of hand and power tools used primarily by the automotive maintenance and repair end market. The company has developed a reputation for premium priced, high quality, reliable parts, and excellent customer service, provided by its franchised network of mobile “tool truck” product showrooms. Over the last two decades, however, the company has grown increasingly reliant on issuing sub prime dealer credit to its customers in order to finance increasingly expensive tool purchases. Snap On has adopted aggressive accounting policies that disguise lax underwriting standards and elevated credit risk within its credit portfolio. In addition, we believe the company faces competition from lower priced tool offerings, and disruption in its end market as a result of the coronavirus pandemic, and the impact lockdowns have had on miles driven in the United States.
