Snap-on (SNA) 31 Jul 202020 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Snap-on Second Quarter 2020 Results Investor Conference Call. Please note that today's call is being recorded. And at this time, I would like to turn the conference over to Sara Verbsky, VP of Investor Relations. Please go ahead.

Thank you, Kathy, and good morning, everyone. us detailed review issued in morning. joining Results Second earlier for are which our you today Snap-on's to Quarter this Thank press release

closing have perspective Nick more our will Snap-on's we'll off questions. our provide Nick thoughts, Aldo We a morning detailed Snap-on's performance. kick call financial with Aldo this Nick Officer; then his Pagliari, Officer. of Executive provides our your results. and Pinchuk, Financial Chief call the on on review some Chief take After today, will

call. usual, supplement our Investors projections during or As and state the forward-looking the otherwise relative our These of this beliefs along estimates website statements. slides on or Any management's actual webcast expectations, made we've may transcript materially in viewer as on made under tab snapon.com, plans section. call under with are or the accessed outlook These statements discussion. from our management's provided slides to website, well those differ as in or slides such to results can will statements, Downloads our archived the company's be be today's

are filings. from the Additional to in materially cause forward-looking that those SEC contained statements in our factors differ our the results could information and

GAAP this their be counterparts. are measures considered Finally, presentation a of to for non-GAAP which not in as meant includes financial performance, substitute isolation or

release and turn on to said, Both conference, that including of XX. call our like included our reconciliation our non-GAAP in Pinchuk. a now Nick? to With information, earnings slides is I'd website. Additional found Nick XX over on measures, call be can through the pages in

Sara. Thanks,

turbulence our days shifts number and the special that's and and this thank also We our our - continuing safe. we're symptoms of to dark. customers Before possible, them intact and It's well-being the continuing the associates, in And we reinforced keep invested preserve that among and brand stay a maintain to when tracing. the and so. there's in working turbulence, of do cleaning, we're and We're of distancing to to to investing I new quick are brakes, clear invested they protective are challenge, team. members deep get Snap-on are stream The pursuing our when to of using new not stream hard from throughout that a society personal going, in time, great team. in and continue worked Working of products. in essential contributors essential in often home, safety equipment, strive But who essential paying franchisees, those a of the Snap-on staggering We've want prioritizing people instances, also health, advantage. this products, attention a hard communities. and we'll contact

in plays we're full more needs virus at and combination those This in out franchisees out virus three reaching late their customers. in evident even of a initial both We was A and interruption on shock. of in and substantial associates franchisee to be capitalize now helping, second, the passes, our regular and our the to level. at customer We First, possibilities. the that April; the March phases: a the project the activity period. know For there'll on basis we our strength franchisees active understand want opportunities. their When

and pursue their environment. operations more COVID-XX against to ways the and safely more develop opportunities As individuals

broadcasting in that through In we've process, actively seeing fact, we best of effect that hard and appear June to to accelerate participated comeback. working practices, And onward. the be course, May,

recovery. Finally, the third phase, psychological

buying before opportunities. participation. regain see that resume in full confidence Following they future a to great recovery, will customers to normal, in return And need the we

the recovery be construct but overall more is upward does becomes consider restored the slope continuing general the forward. shape way popular, represents trend, of even more This driving essential. what of even represent to greatly the so As clear. for It we a isn't Nobody course, will sure, by phase ascension far. we've are virus. be of the encouraged influenced what but by evolution And we knows seen the future psychological of the the ongoing

April as quarter recovery. was back, continual we progressed, Looking showed the But nacre. the

better businesses June. in pandemic. Our and did profitability to May learn Both accommodate sales in and the improved sequentially

with may situation that Although as the projected. us, the virus is we evolving just still appears be it

operating the of at April, end varies landscape. said impact our we COVID-XX the of As across

economic and the virus Asia overall have distress appear of and worst, Southeast do combination in in for made to present all. turbulence. Europe, has but are remains And Korea virus in challenged. Asia before pandemic China deep Japan, weather India the the weakness South the the still with deepest

team that movie this limiting love the also XXXX difficulty. years, each with since time direct vans I we to differences, In every seeing beyond the and we paid Snap-on's we've different. this we particularly Recession of resistance believe ongoing investment evidence geographic resources we're and it's Hurricane, has we've And disaster, Harvey somewhat our opportunities to no again and learned of quarter positive in foundation face-to-face We say continuous many safety, products with the our lessons mobile the times innovation customer those creation, continuing Great evident continuing other with and customer virus. rapid We're to Snap-on stream quarter the seen Snap-on new that has personal stronger weather stronger focus in in Well, we effective in businesses, on in taken this of shoots just products. compared innovation. faring be as this effect sales ready. was do Superstorm in the models. the and value disruptions connection strength, connection, new accommodation to and better Actually, the of our forces challenge. will and before recovers. for Beyond a and our Sandy, of have We are to is going as selling over challenge an and the this. to and the accommodate that, of franchisees we're dividend Snap-on traditional forward maintaining, appears and as recovery it and be of quality, to green that's our and them stands overview. of because never that natural the past. will the once resilience emphasis That so record That keeping XXXX Katrina reduced psychological believe us and we're emerge and and a the apply our way, believe midst going believe the the grow time environment storm make improvement.

results. Now let's the turn to

$XXX.X OI XXX-basis-point effects direct a the including costs $XX.X including of associated million operating as-adjusted foreign organic million, XX.X%, currency unfavorable from the or of $XX.X currency an unfavorable $X.X foreign of with the XX.X%. XX.X%. reported an was as were declined million, and earnings sales million virus, restructuring focused $X.X Europe quarter, million of quarter OpCo charges, for sales to down From perspective, million restructuring, $X XX.X% impact Optical Second in on principally level, XXXX. $XXX.X excluding compared million and was and margin

to as-reported XX.X%. down of $XX.X $X.XX operating to Overall, $X.XX services, compared last was on last year's from basis was year. income financial EPS an compared million For

overall Well, Excluding charges EPS the numbers. was the are $X.XX. as-adjusted those restructuring the

including groups. operations, versus million, $X million million, of double-digit currency, of all and economic including foreign effect last was million light operating $X.X $XXX.X C&I currency let's Europe. operations, million to a of $X From $X.X point costs, the unfavorable restructuring of on of in in unfavorable income segment's an weakness million decreased of effects. turn declines primarily down the $XX.X million of ongoing was in the clear $XX C&I, second year's earnings There $XXX virus volume the related reflecting Now In perspective, COVID-XX of foreign million the in quarter of and C&I. of

areas impacted was education, was experienced industries direct the do to than growing growth. industries, but and gas Our as industries, remain in down, forward. by aviation and substantial across surprise. Both expect those and though reasonably do other opportunity you But effective heavy extending down and international and moving pandemic we as register contraction. students. still the and confident resilient to see the no the while continue segments in in Military might to critical sales such less truck, was oil And were group. other committed there we were There significantly critical no customers

creating Speaking products. in about talk new let's future, the

we Hex quarter, introduced The units. our another this one Cordless Hex great Just inch XX.X volt quarter of CTS driver. XXX screw new

connection great as were $XXX.X now Our business The $XX.X $X.X this costs, unfavorable already million significant virus-related torque, all hit of throwing for where handle makes powertrain a a model. it's unfavorable of grip serving foreign of nine-position cush unfavorable a restructuring longer area. currency. life. COVID illuminate $XXX,XXX foreign run Tools LED lights, After charges designed Group. our that's month. ergonomically features comfort million XXXX. higher $XX.X organic also the work turbulence torque power on launched a was one a tough amount of and both gun Group currency a essential a of million of $X.X foreign text safety and significant across to the Sales is and million that C&I, screw lights fasteners job, a The from driver the our already twin quarter, was a million innovation new of million earnings of built-in clearly and unfavorable $X.X navigating couple of million the including The The But demonstration giving decline direct resilience and the months, proper gearbox a $XX.X were clutch in compared range face-to-face break in recorded It strength it's products, million, dual April, the critical. packaged just dollar the and tech to our only essentials, time, brushless customer the trajectory with of and to success. feature. work for operating Tools motor prevent reflecting tool of in foreign clear more twin for

individually April varied geographies network by The rose virus late and March impact was deepest. affected. the all the shocked region, but April, and collectively. As the in was were

in that franchisees have Snap-on accommodate increasingly the our subsequent support with their and essential. collaboration to each And month, file gains. significant However, pursue vans the shown pandemic point, of effective moving ways the team from the

accommodation, you sales with Tools customers our start X.X%, is the were quarter. down has highlighting Snap-on hear nicely field direct from always The that the bun up Group had ongoing fact, a with June the interface after working and the the tough dramatically really and In to well for that have this the to just been There's for and capturing difficulty, thin. pandemic stronger. men and believe franchisees bodes nothing we in thick through the that future report together position new And opportunities. market like working and never women many our relationship forged in

cost, as and this of business, So virus, despite our we're fact, in quite annual The And growth, a That's highest distinction stability. ranking held of XXX XX -- size, And view outside support, rates once the being brand clearly in year, again, top Distribution organizational best the still recognized franchisee franchises. reflected strength companies some a Tool we're and entrepreneur power, quite category. entrepreneurs about on best again scored positive Snap. the time. in we've for the financial Magazine's we franchise

the our sharing supporting promotions. and hurricanes, move action expanding healthy Almost Set. new safe have is customer becoming Flank best XFRXXX and been working guided more when forward, the the of launching products are Box by and line-up. and selling, plans, the Drive and Snap-on born Wrench out Flex critical. process uninterrupted associates Ratcheting a in As This course, continuing the process did effective X/XX, connection, to we successful tailored powerful it’s Everybody clearly for it's the And team recessions of that's introduced it a ratchets. every targeted win, XX-point franchisees includes against working array promotions of practices threats a with we that effort we solve also Double great quarter, we been and And again. knows we've of innovative again developing

tightest of mouthful. lot head narrow design, offer. with allowing and combines in XXX-degree Now to that's flexible spaces. It our But width this a has the work unit a low-height

Dual accommodating in strengthening here the technology, I Snap-on arc just new current The plant our a product, technicians restricted USA. our strongest even the areas XX its are in and Our built easier. have right Flex testify. anywhere. Group, $X to be configuration is in and great durable the special was team Yoke/tang and The XXX way out I gear turning for that innovation furthering on patented minimizing can set most to Tennessee the the and driving four-piece ratcheting plant million even people product. in that jobs that's the Tools flex pandemic, unique environment Well, Elizabethton, another in there noticed, future. again, provides and And making utilizes head swing

direct RS&I million million recorded The million operations, that the projects the of OEM speak were deeply acquisitions were and of of in our subscribe. $XXX,XXX volumes of garages let's XX% uncertainty. a spending million challenges, costs. compared foreign foreign Sales with lesser need $XX of a people's over with European $X.X group meeting to diagnostics Now unfavorable fixing equipment undercar COVID also in from sales, of RS&I. information finished new million, both $XXX of and but degree, $XX.X relating year. decline products, even repair with attenuated areas capital currency continue and recent million decreased $X.X shops negatively repair to the last including $XXX.X impacted, quarter RS&I The of And vehicle and in to $XXX,XXX million lower the independent reflected invest level currency, restructuring, activity a operating to including like focused unfavorable and earnings that associated pandemic. in $X.X

overall manufacturer innovations includes One as like to was safety which driver all a were national links in information-based illustrations, operations listing response needs The that. its latest repair information enhancements customers Mitchell account while new procedures. with vehicle to as important recommended listing a the effective group now we identify and points system, again, the So directly vivid were generated to products new pro of excitement vehicle large in which impacted, lift as quick of the not Once our prodemand repair menu. points reference designated well range in menu the

cloud-based, trucks. You clear the the its We're with we to owners advantage and whether confident products with moving and comprehensive the amplified can home to competitive psychological from expand this our light position build in Heavy-duty only technicians the our to by difficult to extensive away our and e-technician enhancement. for capability everything making into trucks, trucking data group. second easier another virus Snap-on new and build most creation, the the diagnostic and to information from will turbulence, fail history, lift driving those and days an every way that a path. transmissions, that's RS&I weather keeping to diagnosis the strength the for procedures. essential, capability, Snap-on in to the pursue screen. click good. software not were every operate shop vehicle improvement, correct regardless future also to the designed as when engines, to take the even of of powerful our session never combines our industries. find we work clear. giving vehicle X.X are those and vehicles customers, only can the users of and Injuries And the diagnostic our market. follow. to month-by-month value a the chassis the be system managers, accommodation in days are repair body whether in and now full array quarter. of The Snap-on the write-down have stronger but virus. and the brakes, access for truck power environment, support demand days. significant see helping safe and It's to diagnostic quarter, franchisees sometimes X.X convenience confident along It systems hurry, coverage continues follow their in opportunities specifically in X.X safety more. the lessons required Shack, But team, driving vehicle engaging The expanded the great experience, launched our teams a adds of in pursuing the second damage keep fleet-wide from heavy-duty e-Technician recovery, Well, the It's today's step our is our who we stay heavy-duty in to fleet, we days X.X and And direct lift one commercial selling in ready what a Also new emerge of critical our capabilities, location. applying the virus, in e-technician the the medium provides pro now show quarter, repair believe all capability being

the I'll Now detailed Aldo turn call over for to a discussion the financials. of

Nick. Thanks,

Our sales organic acquisition-related of reflecting $XXX.X results operating the Europe sales. $XXX.X in operating million million $X.X while a declines of The declines three in the decline, six. currency the consolidated COVID-XX in with pronounced. some unfavorable sales million more translation summarized of slide to impact there variability are quarter, reflected to year, primarily location pandemic, of and on the was quarter $XX.X from XX.X% Net sales the compared organic In sales location, decrease last segments. foreign million were all

throughout As place anticipated, the world, April were and year-over-year on impacted in the of with sales a down government basis. measures in significantly were heavily month

our began operations accommodations our and Similar May restrictions, adjusted virus of our last and government-imposed to sequential European-based and we to for we to locations As the accrued as those certain in began of to with see restructuring improvements through operations. reopen we which included June. costs various associated activity for move as quarter, environment, franchisees

in quarter, recorded second of the million During our reflected we each such operating segments. $X which cost of were

by point COVID with quarantine the fees XX in and costs direct temporary cost These of capacity Consolidated Additionally of impact and associated decreases the sets, associated partially reflects XX points decrease related basis were the year. actions. last impact costs to basis savings from offset XX.X% basis costs from initiatives. direct last of primarily compared COVID-XX These points environment. skill sales gross of health expense accommodate from RCI million safety to associated The points basis cancellation volume. unfavorable including event we've $XXX.X of with and million enhanced closures, currency COVID-XX by current XX.X% of and response of to year. factory the partially in of lower $XX.X and as savings associates, worker volumes, XX. $X.X XX to include direct costs including costs direct The basis XX.X% of as wages quarter, from labor increased costs foreign cost actions XXX million for restructuring manufacturing primarily before direct other margin of $X.X compared restructuring points XXX basis costs financial XX restructuring of COVID-XX, costs. points earnings items containment lower associated and services effects offset the $X This were well reflects The in identified with under-absorption Operating $X.X million, XXXX. maintain million million increase as of lower XX.X% with operating as well margin to the

of services of operating percentage a year. to XX% financial margin As net compared last XX.X% sales, before

$X of million of million, last effects costs, charges COVID compared Consolidated provisions million currency of related $XX.X losses. Excluding of operating XX.X% $X.X restructuring million of the the for last financial of restructuring services $XX.X earnings $XX.X operating in foreign year, $XXX.X million to to earnings second year. or compared $XXX.X million including $X.X in services a compared $XX.X XXXX, unfavorable levels. $X million while before XXXX in increase XX.X% charges, million revenue primarily of of and million from of million operating X quarter to earnings reflecting decreased credit XXXX sales, million Financial $XX. direct

of of or percentage of operating XXXX decreased revenues levels. XX.X% the earnings margin revenues, operating earnings year. an a to On of excluding restructuring, XX.X% from XX.X% As basis, compares million XX% $XXX.X adjusted last

basis of XX increase to from the year. income Our last second point second quarter compared of effective restructuring rate quarter XX.X% including for the a tax charges XX.X%,

million earnings year a a charge million per net or $X.XX $X.XX for per or $X.XX restructuring of share, $XXX.X Finally, $XXX.X compared to including share ago.

restructuring per charges, or net adjusted the earnings $X.XX as $XXX.X Excluding were million share.

operating XXX charges, COVID-XX cost XX initiatives. points foreign The lower costs items offset containment of Operating $X.X cost, effects. the direct for basis $X sales margin million were both basis of direct technical C&I organic by seven. from latter million, compared campus margin million critical power and a RCI were industries, of currency agencies natural basis $XXX point results. points being XX by segment basis XX of as resources, of basis offset benefits XXX C&I margin material impact organic to well of with lower operating Now $XX.X XX.XX% compared industries more a last cost sales mid-teen tools effects XX.X% utilization from as to with decreased closures. offset to unfavorable were including includes $X $XXX.X foreign Sales lower compared million savings and XX sales operation. our by decreases million the XX% segment on $X.X to expense various well let's primarily oil declines customers reflecting slide currency XX turn the points year. unfavorable and than declines $X due points the in decreased These of to points of impacted year-over-year, last associated XX.X% in increased from charge in the sales, group million sales $XX.X the the foreign due currencies and the unfavorable a of related earnings gas, X.X%, XX.X% of restructuring partially as company's and of government-related of the year, costs. million decline sales restructuring in related million savings Across The and gains of to including year, year to education last translation. to as critical million including charges COVID-XX and The direct decrease the primarily partially manufacturing ago. restructuring Gross basis COVID-XX capacity, of by and These for in efforts. with basis points including school from of Starting

decline organic foreign Snap-on sales decline The mid-teen to a slide million of US organic franchise nearly of and the decrease to XX% in sales our decline million reflects Sales eight. and operations compared a now group $XXX.X $X.X in segment's currency XX.X% a operations. Turning unfavorable reflecting $XXX.X international in million translation. the Tools XXXX, in

last in our most group to lower ago. due As with currency Snap-on declined to points, including Gross unfavorable margin Snap-on activity Tools Nick sequential May $XXX,XXX like XXX $XX.X basis year-over-year last foreign dramatic a year. in the restructuring direct sales effects businesses costs, XX.X% restructuring the of customer-facing impact XX million points for sales costs $X.X XX.X% as direct as Tools of foreign XX.X% of basis from the $XX.X year, the related associated points capacity of of basis well XX.X% and The manufacturing $X.X of XX COVID-XX of operating and lower from cost operating points direct with margin and year to and maintain in XX.X% costs due million April, volumes, expense of of points decreases primarily basis mentioned, unfavorable cost impact there related direct in COVID-XX, partially effects. million by improvements were the of COVID-XX to currency charges. had notable compared to sales, the charges compared primarily $XXX,XXX million, The were actions. of of June. increased including containment of Operating costs XX earnings XX offset from savings These margin basis

operating The sales. The information organic and and RS&I organic in XX% collision owners and sales includes largely managers a compared decreases shop on undercar sales margin charges the unfavorable sales lower year of $XXX by $XXX.X sales as shown points from mid-teens businesses and savings and of of of Operating Sales lower sales XX.X% repair I last million from for to of of projects. XX.X% ago. facilitation million million year activities. XXX from from foreign group decline decrease expense acquisition-related products, a last reflecting offset operating undercar XX.X% independent reduced sales million to sales including of of million, $X.X margin slide RCI equipment year diagnostic dealerships. of XX offset savings currency and XX.X% effects while million the XX.X% compared $X.X the basis XX.X% as decline The OEM last partially RCI and due increased of equipment sales translation, year. lower direct gross both to partially to the The restructuring of $X.X of improved dealerships year, sales a significantly primarily Turning of million in charges, lower $XXX,XXX includes margin basis restructuring lower points currency earnings containment in due nine. OEM primarily impact group OEM and to to and RS& a COVID-XX products actions. over reflect compared repair to to related unfavorable sales of foreign Gross margin to million other XX.X% costs $X.X by well ago, of $XX.X $XXX,XXX declines of from of cost $XX.X

$XX.X million to XXXX. expenses services to $XX.X of million compared losses to turning from services for in higher provisions credit Revenue to compared XX. Now operating slide Financial services million of last year's $X $X.X financial levels, from of last year. Financial compared million increased of due $XX.X million million to $XX $XX.X earnings primarily million XXXX. as

that favorable result experience The lower at XXXX included a non-recurring time. provisions second quarter as of loss of

on The of operations approximately loans included yield $X.X reflects decreased percentage The respectively. the X. COVID-XX was million support million Total loans receivables the the of XXXX. million for a second franchisee lower quarter X.X% offered an our yield or business environment. interest $XX business offset loan This and of receivables finance was primarily average in the These earlier. decline by and operation was XXXX contract loans decrease receivables. the X.X% were dealing portfolio, average X.X%. in on average contract during on originations impact of were resulting increase franchisees mentioned in receivables finance franchisees. from of second with financial to a services X.X% the lower of respective operations yield both The XX.X% contract help support and quarter accommodate in originations X% XX.X% to and XXXX and in quarters $XXX.X second the originations offered and receivables XXXX As X.X% of in partially the finance XXXX expenses receivables second of quarters of

Moving to XX. Slide

including Our financing from $X.X approximately quarter-end sheet of U.S. billion $X.X our includes gross receivables, balance billion operation.

franchisees those compared collection down net second end, reflects X% payment payment Our in to This a portfolio of in credit year million finance during $XXX.X of finance period. our of XX-month X.X% plan for accounts extended receivables as reflected or in of quarter as worldwide $XX.X Total second well U.S. credit relief $XXX.X are customers. XXXX. sequentially. quarter. granted receivables gross to increased charge-offs greater the the the which million finance million programs totaled and the the receivables in as the portfolio. six aforementioned on improvement forbearance represented effective the throughout and of of of from use Snap-on deferred franchisees of we primarily XX X% finance receivable of XX-day as requests the the forbearance in took programs, rate sales Similar for by $XX.X May, extended within XXXX. terms executed quarter the or and lessened financial April. portfolio. X.XX% of was ago. and practices our This million number This quarter place greatest quarter the services down quarter of Collections the during million trends the second payment forbearance quarter the approximately $XX.X is this short-term our basis of to to compared losses some qualifying below collections business, during year's for of Historically, of quarter elsewhere of million saw extended or outstandings end June, on points points credit relief delinquency plus $XX.X having Trailing at credit The basis

senior of in operating This XX. from provided $XXX.X Cash expenditures of receivables receivables free change investing cash primarily represented $XX.X from $XXX.X Net of $XX.X of reflecting capital an million reflected million million in investment, year Net and million in liabilities, and net offset expenditures million flow proceeds in notes $XXX.X from by In $XXX.X by of comparable partially $XX.X last cash working $XXX of net provided $XXX.X payments, activities repayments other million Now, the million $XX.X net of earnings. by of the by less or finance capital of used the operating XXX% activities including XX-year included in lower to quarter, in flow finance levels, earnings. $XX of and improvement $XX.X activities notes, additions million. from by decreases million lower quarter XXXX offset total financing $XXX.X was turning increased the net our million. cash and net in of and April cash of slide million. short-term payable tax changes dividends borrowings million assets operating to the activities included million partially sale cash

repurchases While under of stock programs quarter. common share there no were the our existing repurchase during

an $XXX.X availability quarter up to of million of authorizations. common we repurchase remaining As end, additional under to had stock existing

support of the to XX-month to XXXX million turns year-end. from year-end trailing decreased operating across accounts Inventories year-end. million On compared of at Trade Turning primarily XX. XXXX $XXX.X all outstanding of days a increased XX XX other X.X and critical This compared slide a Days XXXX. receivables at reduction from to outstanding industries. year-end, in reflected XXXX X.X basis, inventory sales days our $XX.X to segments. days

Our quarter compared $XXX.X end million year-end cash position XXXX. million $XXX.X to of at

debt of year-end to to net XX.X% XXXX. at compared capital Our XX.X% ratio

to and facilities. than million flow addition we cash in In available operations, have cash more from $XXX credit expected

amounts credit both to needs expected I'll a facilities concludes performance. cover few uncommitted long-term review on Despite both paper commercial have second no cash in environment, quarter As of the were the uncertainty facility, the our available were briefly and there items. credit and access current remarks end, outlook under updated borrowings we believe the That we sufficient quarter there basis. in no a outstanding. to now outstanding committed funding and my and near-term

believe experienced environment. Given the the will in near-term, sequential improvements there in second the levels we improving increasing quarter trends virus-related the of accommodations to continued reflecting be

rate to cannot million nature the $XX provide we to $XX $XX of capital on due pandemic. However, that uncertain of assurance and million a million. as of to duration to compared million prior in the will anticipate $XX be range evolving progress our We the estimate of and expenditures

continue rate income will closing Nick? XXXX XX% his the turn to now back full thoughts. anticipate range year we Nick a effective to to XX%. our be for call Additionally, that I'll of tax in

sales were Snap-on down. second Aldo. Thanks, The quarter,

an XX.X% adjusted, as we of numbers course, significant was but quarter of like also we XXXX. mid-teen target. the Of than adjusted, greatest demonstrated believe it. long-held the down The as they EPS any but still as before withering level approaching perhaps the $X.XX XX.X%, But OpCo time. aspirational higher margin don't - decreased, the end are resilience and of our we that

experience The that positive the have But on believe of looking our shocked -- last will reaching future are again value sales tools won't is June the in us assures demonstrating any for way impact That - to learning this the we appears at in to corporation point accommodation. going virus and is Snap-on attenuated. are across the the emerging year's the from has we through that more of from of affected What dark. opportunities level. to evident operation guide for the even operation. and helped shock of model You X.X% that not everyday future of our vehicles within recovery. The before. the and trajectory seen get emerging with direct we abundant depth important. be rise and that movie see And continuing April life, accommodation was believe we Snap known. be It group the

in our products, and the team. launching see our we enhancing maintaining network China of can are capabilities to and the that's reinforcing new And You U.S. franchise preparing music already our and brand, our Northeast, ears. in

this what stronger come. arise. ongoing believe continuing we these when growth, in to will for of And be enabled position we're cost profitability and the virus doing fully that it opportunities of Snap-on but the the a days prosperity represents for in and all increasing turbulence, years Now ensures we'll

the extraordinary I Associates. the has world. operator, in special Franchisees I playing of It been to all I'll people, over turn call role -- & that never clearer to very Before again speak our you once a once are again our

unfailing the admiration. thanks. and significant my contributions you in accommodating your have success future shock my your of you maintaining your And in turbulence, the society, our surviving for in the ongoing our For have belief have you enterprise, my congratulations for

call the operator. over the Operator? to turn I'll Now

C.L. [Operator Stember Certainly. Thank with Instructions] King. We'll to Scott first you. go

thanks Good taking questions. my and for morning

Good morning, Scott.

businesses. Nick, what's you of is Maybe probably on good Tools the at within recovery. gave up. experiencing greatest sales coming could the how It how of the talk recovery cadence we seems a the C&I, expect quarter color lot Group and like about happening the recovery RS&I and

I a never May, guidance, of - June, is Snap-on, the there everywhere of give don't that's Sure. improvement of of a true was through course, Well, progression say generally, April, of in generally, vast you periods. those look, I'll tell majority operations, But course, seeing what across but we're we course. combination our

group, one called me had get Tools the was groups. There particularly of wrong, because out don't the well. So done across a I they those that fact combination every

in particularly in where out through I the their activity. selling. direct that period that's So, industrial, progression selling - had some They nice direct called

down, future you were as and step say a down? recovery hard - couple the equipment. need were projects, business, small all vehicle In they think capital-light OEM which the you after projects confidence you're as to that. general, our this see and period, are it's that project lumpy, But businesses, the psychological of are in selling of see quite invest very I generally the which One, adjusted. kind XX.X% selling bifurcated XX.X% across If have back to and and a -- equipment would to reported, sales that or we they're in Like in seeing to XX.X% situation generally, is to what C&I, pieces. the to you RS&I, which selling

a they and year new means latter, to that I've as fact they cars be the that should what of to in businesses. they're psychological - talked in or maybe flow? of associated piece should it's repair more had and about other need because big used car times, view start Do is, in their new on cars comes with think dollop should this and they the investing, the those If the going just sell uptick more there's other less pull Now, OEM really the parts an they horns, and depend there dealerships.

were originations side, all it. Maybe that down by to services much. financial shop Got the was health moving explained to level. the franchisees. your not I the what of repair franchisees and loans the seeing And you're really talk about But over that just at the guess

all of our on since shown pretty used you talked I the recovery, much the could as they a accommodation these the is sales they work I'll - was things as phone days positive. around we I the bands. one and say better just of talked the to I out as about strong. some off will the think our the would period, that can't in speaks tell quarters in sales X.X%. you than quite Tools van franchisees and I Look, I I I as travel with country. Yeah. seem mean, them the the seem last originations the of I the that to the week, to tell viewed through that And volumes Group this Well, be lot

that we particularly selling items, to to a happen and which try our is in see inventory, some big-ticket of little they you what of fundamentally, franchisees storage, out tool to origination in bit So situation their see thing. inventory Tools of tend of but the combination. taste the showed therefore, accommodate a you off the Because that, the sales the technicians. sales great are as fundamentally, van outpacing. Group a And it see The

sell June, being said, saying the only down that off are you in sale if So were June? van the were in you you modestly in,

that's think I'm and I situation. better. it I originations. than in say than didn't the better say It said this X.X. clearly willing anything. to what That's to what it -- I I the was better -- significantly was the what leads But I is said said. said I

it. enough. Got Thanks Good for questions. my taking

Barrington And now from Prestopino Research. we'll question Gary take of a

everyone. morning Good Hey,

Gary. Hi,

Nick. questions of here, couple A

markets some all your van First especially you sell to of on now all, of are you open, able are -- these mean, all, of the well, Northeast areas… the first in I side,

a lot Oh, yes. When between hit, now was shock less the Everything It was -- variation terms open. hits, virus is variations of regions. opening. the there's in there

the much, about we’re not between, of talking a have much not still you with activity, say as Northeast, attenuated as attenuation. swap but the Southwest, So people lot as

but and kind was and while. case have they've if not for of Canada come this to I of like businesses Now the to difference I but was shocked -- between the areas don't in enough basket a shake think, were on really Canada, those talked U.K. situation. call, shocked have People together. is those them, stick There started at, all together. some of I arithmetic a all know come

coming back. are the So guys

the varying accommodation quarter through happened of that's process. part Now levels, at the

mentioned opportunities your and Okay. mentioning to or the those you opportunities given that from that areas to really public And process own cars taking individuals are other getting process transportation. about? fact for also are going company, on the cars than you want older more then is that you really situation. thought didn't thought keep capitalize to stemming I COVID-XX that this talk are you're there rather or thematic where Are looking mean,

think Well, about. a of I think But couple those as things, I'm are talking the two big I think -- I things.

terms things. think. cars getting we They've probably are of three older lower older. say this year. -- think that I course, would SAAR will accelerate fact I older, gotten cars year, a getting of One, it's And the every in

thing that's the one keep keep virus and kind so in. Cars so frozen And is driving. people changing that of does and

that drives And then our and so to we a technologies of expect situation. see new now, few slot closed

subway down Secondly, want are go don't the to to want at I on on I least so in depend much don't to think you and -- going Chicago. a jump think L to on get and anymore people or that. I

people people we which for you in time if and On in right play of finally, things And driving. pause on they and the I product into sell this because in cities assistance helps I electric complicated can and vehicles, know and estate more because change new means tools. suburbs, the more top of to which, advanced which maybe read And so and going out collective estate, that are start down more see Northeast don't a residential systems, to gives our think has transportation, lot what and that that moving real like wrong are kind changes even think things driver us increased for that more more want of and we situation. park go the driving, depend real see we technologies think commercial car China, the

tools have just XX electric for especially We made, that we've vehicles. kit a

roll out, So be roll with to they we'll ready when them.

you the you question, And an sequentially, you QX. answer to seasonality did idea. seeing my still I part there was Are just I want mean, see quarter. – that you last still Okay. the the of then at this. an said in I'm trying if a throughout get realize to there. improvement early sequential sales improvement

We quarter. don't give guidance. And a look, squarely QX is

Europe. However, you've in vacations got so therefore,

SFC, got you lot floating of You got the there. through a things

about did say, I However, what June that's say. May, I'm onwards, willing to

Okay. That’s fine. Thank you.

Sure.

And next, we have Christopher Oppenheimer. of Glynn

and Was willingness material onward little bit May-June or RS&I just dynamic there a to negligible? tolerance press more. on Nick, for your the C&I

believe to will this get mean knows future want again. we I it's is and I by did the don't I is say go. stronger how don't virtue to already things. disruption kind that shocked but – the said of on nobody I we accommodation, look, we these kinds Everybody overheated – But Material. get what of going against of are

I I So But we we more. is the – maybe bow little I've like unclear. think said shape implicit, The a is. it of if onward and I expect see. And we environment. said third better get and also, already And what better at rises, dealing the world saying like I motion, we're with the bit – we quarter we the curve saw I that is – accommodation

then restructuring. some Okay. you've had And

some actions there cost think leverage going way to to may we about on whatever model? sequential choose Is temporary away. a You have uptick

have restructuring because had in – on was we focused mostly Europe. it Well, it's

general. or a of and not weakness the of Europe in I while America say we'd North times of is kind saw and economics. We'd say, watching $X seeing focused, we – evolved think million for this European because of been kind we've two, that six-tenth while the in the It's necessarily. mostly

capacity. raising prepared for RCI So and we've this through or been

our only. think, we actually investing deal these we enhancing There's holding That's that That people and are saying means we implicit, the we in other people why restructuring. I in believe I can say a this So we with because I higher about to our this team. volumes Europe. have lot, people, we maintaining brand would products, know less and are we're are don't hard people capable. And duplicate. think but our with

we're So them to on life. holding dear for

of were for the it's in wondering charge-offs quarter, – Okay. if On that's the one going I'm relatively considering And on. last me. all SFC, light some

implications Or mechanical of continuity? about it back did the there in provisioning kind this some of any calc of half, for get talked You consolidations. the deferred dynamic? is a some of kind more Are

Look…

know about to... financial Yes, just wanted performance to the

I feel this, than I And better Aldo prior I'll better I now April. just now. I'll feel in say comment. Chris. the let call did in

Yes. say return stimulus little see because we when a period got tax a to your yet of bit probably got and that coming reviewed everyone's as improvement it does refund their refresh people just up in. Chris, reminder, memory, typically the not tax electronically, seasonal still just bump probably with of have everybody being you're checks you IRS. if didn't submit a I'd But a tax progress QX time QX. It's refunds, obviously, from their get you

the year-over-year, so at This you with deferred progress help from with they there associated calculation, payment XX there's So we better basis by that, said XX bit point you programs. occurs was XX. to sequential look normally, a QX, that have be a from probably QX we might expect and the tax tailwind points deferred some look to the XX if it XX, fact programs you time, say, still saw in year-over-year, refunds. basis I'd improvement. Having forbearance the QX that XX if

by on deferral So customers be definition delinquent. couldn't

bit. So away a go that will

like geez, history So get lot natural traditional it mirror far. more levels. you'll in a so from looks our I disaster rearview think But a the

pleased said, out. the environment. volatile see the still a It's So we'll But pretty remainder we're with quarter. how the plays charge-offs like I in

Thanks.

go And of to Longbow we'll Research. now David MacGregor

good Yes, morning everybody.

Hi, David.

just trying sake originations of of for I clarity, but a sake have the excluding would wondered than the loans the the the to of just can through numbers, say bunch franchisees? fumble been just you for clarity what Good morning. rather to

Well, the were contract XX% receivables up the quarter. in

So that's clearly broken receivables. out, if at contract

as David. down was Nick mentioned, X.X%, EEC has So

sure Right. an I'll up take quantify line. here. make want the I accurate extent number getting return that of you the All to off And Maybe we're right. then from… with to can the just

To It loans make with EC the the has to has nothing franchisees to nothing with do easy, it EC. do at all. to

So the originations… EC

the it off that. I the line, up as revenue with extent, take quarter a you Returns, if the treated they're could returns I'll I understand I the I if account. that's in okay. the quantify extent and contra know of wonder

extent a headwind they growth? to which the were Group for Tools So organic

terms I just the regular the our in it perspective, regard. don't in of look tend mean, which anything notable was I that from at. I there in quarter to returns, was we think a - quarter

some there's back But lot and quarter, So situation. more than the didn't I flush this mean, in I forth. they back think affect necessarily system that guys do that things our didn't into regular any a in

franchisees, Our think, we are pretty good shape. in

question just, guess that I next was Well, is I mean... my

the this for things it's actually, think think might like I not not there's or No, loan. thing -- people a on hold some that's is are really that, -- record all-time but franchisees

the me, clarify And could you that for what's record, the…

was franchisees get that it not are direct, be are that of Yes, paying, on to hold. they the number

there... record the For

that In combination…

the at of quarter. down way came the end Parents

guess, And see it high you credit now? right how because you I guys right ask after kickoffs inflection whole this that had in Okay. a franchisee of overall kind that regional didn't makes the level But about I in to you would overall, feel wanted creditworthiness mid-April being then, a inventory, really about case, which came have when worthiness slowdown of the little surprising do hear to returns. any

of of And we the you in Tools look of Well, about you describe think this year-over-year as we sales at off – pretty said, the accommodation. I ahead them think view the for I at Group. I I are, mean, from when situation, a what pacing terms point talked actually, in they're they they and them – are shock good shape. van think look I

positive that's to very from a From pretty when in talk kind I'm group a of them, point of you – view qualitative of quantitative terms So the CEO. some positive a get you you point of, get view. of feedback of course, a broad

and in working. garages, at, and back, when was you to of humming, they So garage maybe garages every the pretty be the marked. I technicians hear But sort I do dipped pretty garages from get the Yeah, garage the shock, was quickly experiences in are I'm lot parking but feedback. seem the came

any route you consolidation? think for be there's Do going to any need

No, I But I think you so. don't don’t at look David, I but everything, think think so. don't so.

Last question for me expenses. is the operating on just

bit You a a a here, of little had pullback reaction.

congratulations that I have large guessing So a of on guess, volume I'm been may that. reductions. But associated with the measure

So of the the the question is, with assuming, what's to up end recovery take I more and expense that SG&A out the V seem W-shape guess forward? opportunity shape rather the than line going be operating to you we if

or you all in a not. travel all, do on I reductions people not together bring, what sure while while you you're example, situation. of some when you a related, first this hall not a interim have you travel call know keep I things. can – it's you're a of words, putting renting on different And you not I'm look, other zoom you in volume-related mean, for don't think or meal lot things, Well, first but volume and so of I –

Now it's you the on maybe not is that. as do effective, work thing but

I’ve So we And have would believe though, keep because think new maintain going suggest opportunities we our we’re in volume invest that and to it's and forward I our we product all going franchisees, I that team forward. determined already brand, not said our see that related. maintain great intact

I our principal levels then come the the principal we're and big approach numbers the going I pretty approach is absolute we're mean, weather cash my returns given storm, you have – pretty at out stronger we're to of the to principle and where think that opportunities. because are sure my of this So good, to view we look flows, and doing the – is

if It won't it We'll if down not if some, stronger. it's over shocked come slope, out So an it's get an dips get will it. we -- slope upward upward again. not

Just I if quick one one, last could.

for attrition? holds You franchisees. Is low in mentioned credit record due to an increase that that franchisee

No, no.

we'll our And next question… go to on

percentage… talk We of

come And Jefferies. next will from of question Jordan Bret

guys. morning, Good Hey.

Hi, Bret.

morning. Good

on guess. A inventory, question I

Or Is to of of something the in were You working there model? X%. from commented north has longer-term that turns profile the guess as what trend for as kind building down what customers inventory? north capital inventory? you're industries. X.X to can to critical give you committing I in the that's times of sort X% And different structurally industry gone to us the this support critical holding idea I an of product far is And guess,

continuously cater Certainly, industry. to is the There critical that products Bret. unique requirements. Yes, adding Aldo. we are

the not aviation, player have same Sometimes into to level oil and of certainly new have sell you and products gas that in that you they're as serious natural lower the doesn't there volumes, mechanic the are when But addition product Tools so it do be have resources a unique if Group. introduced want to and space a there. to

been doing well. as So we've that

In in items of different lot kitting and activity, the call kit. you as array in might example, that XXX there's kitting a addition, have that an activity projects we

them, and aviation space a both we As storage that for you these facility. expand wait and of incoming Snap-on items for business. to certain not in Oftentimes, do therefore, customer want those or things us different stage come like Snap-on, it inventory kitted we from as forced other rate levels you prep comes as might that not it, from an for floor higher the prepare prepare accommodating do that that. a military requires it inventory with and of they things that because and you products like might variety a we to it that requests And comes when have a and tool cabinet everything

far of Okay. there should as guess, target for ex-COVID, sales shooting a as that be ballpark the we sort is where turns there Is obviously evaporated, number, number? but I a

more tactics. I'm the willing investments we it than think better. in But a I a low to it have return we've could it on on been rate good in obviously, current but an we're here getting depressant situation delineate today, believe exact turnover to be sales. generate pretty puts make and We be think could better. that mean, We truly don't target will our environment, going interest inventory inventory, incremental we if a

see We on don't we on it. inventory necessarily a happy. we're see a to variable, as it, get but an like If return return we independent

any one be sales promotion franchise usually you virtually? Or get anything then would together? question, I I probably is there of the the And have live. guess, offset to Are not in held assume, is as August, would going that what do to Okay. event been a sort

Yes, in We're call from live from we an here forge IdeaForge -- event. the the going our Kenosha. to have

places going the we're through the so have create field, opportunity they in to -- to football products through different And virtual when get went forms and a Florida to like and that. so the would ability see selling we'll trying event, journey different new to go franchisees like

have in up. coming And have August, won't so we'll it it we

of product time. at to franchisees. replaces view, of the, point But able cultural geared new bonding won't happen at event will the much probably be have going guess, we're From other kind view. of August, We franchisees get the I the training the or that to unfortunately, point it. same similar of But we product as the that ordering opportunity a at it's a from a giving in occurs

Okay. Great. Thank you.

Okay.

now And Tigress to Feinseth Partners. go of Ivan Financial we'll

All doing? right. Thank you for taking questions. are my guys you How

Safe.

The be sales increasing, have average of now XX new would age? of Are tools average selling age you a vehicles road more when -- record the or you on are mean, age? to down the which almost high track touched car I see to the that Do when vehicles years.

psychological some have embark are million it dealerships drives by car of indirectly to the where the OEMs the with to We what dealerships vehicles, new to aging impact going affected or It's tools. types We direct requirements. And themselves in requiring have $XX.X the don't But through the project that the newer downturn. the and that deal a year, new have our different where downturn. vehicles is isn't to willingness systems of sell? our a a relationships, on $XX direct either the and can direct sales. relationship be they some to more capital changing million, or volume vehicles, of of on the aging business and a the of which vehicles it's can And relationship, ripple of projects. technologies technicians they the this of

a in this motorcycles. And for week unprecedented I and number Also, experiencing the in Polaris a mean strength the see on even and they'll are pandemic penetrate ATVs and side-by-side as I those they're the runners have from How kinds think amazing tough that things motorcycles, they and mechanics guess, quarter, vehicles a shockingly, CEO going sales in demand all turn created had then of places, has, and area? shortage like -- though franchisees even of you said of wave fire and in to that Harley one do earlier mechanics. that off-road the for the I is well. are they or of

Sure.

of think of in time. places long there's shortage for lot a a I a been mechanics

XX,XXX graduating and the a that they year they're technical need deal year think by a is retirement. $XXX,XXX schools, I from

So so shortage, some -- been there has and to been time. it's we have a for

you that. get to So try

– of in in million those are are of – XXX,XXX on the think are We call only in States the advantages opportunities people think Our we our United But have. them. we places. these X.X we some franchisees the say and we technicians we there's

And some get off-road the not like vehicles, may the of to. where we are those places

maybe opportunities, have particularly transportation, that of more we're We us, good got fact think RVs is of and out we've taking And you're this for to instead think opportunity. and confident. to saying -- coming instead collective the so things. that we turn to, tremendous other if this, an going of people We turn

been personal car transportation. of fire, all RV are -- Used have everybody sales on ATV on kinds fire. are fire, on sales sales

shut factories New I'm the up. the down sales, that will of a car but pandemic, sure because that, were pick while for

from to ATVS, I home will So if stuff. going drive the at can need cities, cities, be and don't for cars, near think that they transportation, yes, away then then I move anywhere, think personal are they people recreational they work of boats, have type to who be

a have… there vehicles? to then specific focus is last for And tools be question, going So on one developing those you of types

right. That's

XX for be? us give specific Can some you would EVs. tool EV specific of idea what tools

be lot Well, them -- tools. we a of a be, would great them insulating would category call

-- level You around poke up an you electric yourself. car, you poke yourself fry underneath

the -- and insulation of tools, So create specifically we contact which between point have the these are user.

of And an this array so very efficacious have which we we situation. in think those, will be

mechanism And other be well with to this think an friend, tools change opportunities vehicle. specific electric But out, deal we an is think I just coming electric point situation. point used. so -- we we then is have going for car as under all and And our these you the you think Change there's that they're -- vehicle in us.

Thanks it. Stay well. love again. I

Good to from you. hear

you. talk to Good with

too. You

Take care.

things to question-and-answer now back comments. for turn like to Sara conclude closing And would session. I Verbsky today's does any additional or that

you will us joining today. call of snapon.com. Thank be available for shortly all replay this on A

your As Snap-on. day. always, appreciate Good interest in we

like And call. We'd today's again with thank conclude does and your to participation. that gentlemen, you ladies for that,

disconnect. now may You