Snap-on (SNA) 3 Feb 222021 Q4 Earnings call transcript

Good day and welcome to the Snap-on Inc. 2021 Fourth Quarter and Full Year Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Sara Verbsky, Vice President of Investor Relations. ahead. go Please

issued and us Christina full everyone. you press Thank results Thank to good review joining release our in today are and this Snap-on's for morning. which you, detailed morning, earlier fourth year quarter

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

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

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

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

Nick that be turn I'd included to measures on regarding now information Nick? earnings to issued With Pinchuk. call which is those our said, over the found Additional release today our website. in can like

make and position our the I'll numbers our update that of give It advancements our you through we've and usual, cutting we the the see Today, it I'll the challenges trends will and on was of of of take we've morning, It execution of Aldo consistent made know all the Good Sara. resilience start quarter detailed give with overcome review as the encouraging. and turbulence everybody. fourth Snap-on The an the a a to some to then, and you the up you strategic we more environment the quarter, be, Thanks, fourth and affirm the and just teams. characteristics through added power that. testified to momentum, financials. of the our capable the company markets, view

million in quarter up the sales our exchange. X.X%, acquisitions $X,XXX.X from Organically, currency foreign X.X%. reported were grew million sales Our $X including million of of being offset $XX.X unfavorable by by

expansion, high, combining the a period-to-period all-time prepandemic an XXXX, year, this XX past income variability points last unmistakable all day. and and basis connection, you innovation overcoming $XX.XX up XX%, in the this was were improvement, million the XX% the Safety, as pre-COVID Versus million Opco year up by of XXX or processes. all margin upward continuing of last continuous XXXX, progress, reported Importantly, if OI XXXX, challenges of The $XXX.X higher was of customer points the and achieved year levels the basis and point compare sales was. there as trend call before quarter offer to last from quality, it, significant we operating quarter from to of see over of RCI, progress. from marks increasing up rapid organically, The an creation ongoing you and clear also XX% bears and accelerating value Snap-on drive. levels. higher

and last XX.X%, the the threatening opco overall financial XX.X% in unique But million were both operating and XXXX. operating income down the services to financial business of it's most XXXX delinquencies year testament last margin an ongoing those combination through the of below of quarter navigate For to offered in from consolidated year. was and of of million services, XX.X% an of from $XX.X our from ability of environments. model the and recorded And $XX.X XXXX, results the up

over Our in over restructuring. a quarterly are was well EPS that $X.XX, my which up included of $X.XX And gain a XXXX, the was $X.XX book. considerable numbers. $X.XX a XX.X% ago Those the charge for year

Now, let's markets. turbulence. see speak environment repair dealerships, do the favorable. be believe the about auto and serving we In vehicle do continues the areas We some to OEMs

warranty however, repair aside, the technicians seeing projects support good shop. their the impacted remain market are attenuated. New dealers OEM are generally the car America are is are China in but the are both expansion Techs There's a to in. by Overall for sales shop are dealership around Europe looking delayed and effect, and healthy. volume with repair, and mixed appetite mixed, programs involved fourth new their and essential tool features programs having were model all positive. In some associated supply tool North but we constraints OEM that releases a and maintenance essential but below the growing that progressing XXXX quarter. levels tough and world chain quite times equipment

is our confidence. color. Now and may Based in shop the uniformly reflect sector a franchisees, horse a independent repair on owners shop, sales our in that technicians, and be optimism what And continues high. Confidence repair sky we that of shop strong. independent it's different to hear from

technicians; keep up our Asia and technicians RS&I innovation, sector. rising our operate A ahead. our $X,XXX but improvement. repair Education, C&I momentum professional their variation. I are or Europe our believe created from natural think markets also more stronger substantial against effects becoming make served well while Information the just resources so. believe to And positive balance, lingering to sector that momentum Commercial we general keeps full spending our product, to our We for So a results lineup that apparent million, plays, do we XXXX. our technology. the Vehicles recovery year the so own potential the are to seeing a our Repair the trend XX% new Creation people. we group sophisticated mixed. areas holding and and & had And to positioned critical last differences creating this, the our has the our that XXXX, complexity, virus from spoken In on the to say The brand of too assistance margin our vehicle The progress compared ever Sales connection, time, product work also this XX%, however, for year match believe, and and and it every Snap-on improvement getting processes, customer before. year the turbulence, exceeding over great that in the matching from our advancing country describe XX.X% but prepandemic of needs numbers for quite There experience, days in understanding for of an was have believe in play XX.X% is brand, projects industries us fuel are to they're I'd and as a era, of increase gain say, to are before. of or and that organic and markets a Group. of the changing Overall, offering high, runways continuing we being results. & public for of XX.X% And XXXX, headwinds. variations the a of investing XXXX. and numbers. to ways emerging And showed insight through products substantial maintain to quarter results especially System the endeavored maintain the have we've continues military we're than place and more keeping including million Strong this as-reported in $X would long organic where is is Industrial country. the tools constant what up with showing day industry for a the endeavored Snap-on I've challenges. XX.X% I confront to Value C&I The continuing well, hit virus progress, we We our requirements product, commitment of growth. for We're confident challenges virus OI on We've pace. we opco era

earnings the clear as adjusted of restructuring signs All were and nonrecurring up XXXX and XX.X%, per adjusted in for $XX.XX, XX.X% the momentum. year As-reported from XXXX. up XX.X% as share ongoing for restructuring or the

operating groups. the for Now,

a and were North quarter. Indonesia, see for Indonesia. down with America China rising. environment quarter, Asia with Versus XXXX, currency. C&I. impact. with The recovery primarily of were quarter start Fourth unfavorable $X.X South the reflecting slightly by acquisition currency Asia Korea Europe grew were million, India, -- sales we million recovery group did down the $X.X $X.X more $XXX.X saw Let's the impacted in sales and the of million, period a million in and volume in and saw we in And Japan, including

line. was Looking but the our offset by with currency. reduced and more achieved supply activity $X.X activity in U.S. million, critical Asia unfavorable those -- And was critical operating that were industrial by by The million, offset at attenuated than spending in constraints. lower custom that industry than income million -- progress area. military more in was $XX.X by chain-driven kitting $X.X C&I precision and progress the of torque and military down in kitting constraints sectors, the the in including the gains progress primarily lower nice industries, our torque was precision

customer heavy clear with ratchet tension and our higher we patent easy-to-read jobs Norbar, progress Wrenches, nuts robust fastening produced maintenance-free. industrial of like design and also rugged, big with a steel of -- for The factory. Norbar torque have strength, been directly Break-Over for easy of original technology Snap-on innovative heavy-duty quick unique Those has light XXX-pound adjustment stresses did indication wrench and a an were driven accurately mentioned, capable virtually provides been regionally new portability. to ensuring convenience. like continuing Elizabeth The products, the new vehicle sales torque Torque acquired Drive error mechanisms Norbar through mechanism applications, torque ratcheting accuracy -- trucks. is The time. great which this target high QBXR, requirements has is work. such and accuracy X/X-inch recently specifically device our plant tough our however, reengineered feature is specialty very expect, lug wrench combines unit It's you release connection designs the withstanding every of and capable our Tennessee operation designed head were QBXR ratchet the as And that line disassembly, matched on observational say feet. a XXX- breakover strong. reliable storage I reached, and might to released The torquing to As torque compact Tennessee offerings new our that Great reduces and specialty from of our of for capable developed as by register has possibility on

increases, prominent it's precision for need products torque in the rise. more areas of C&I, that mixed future. are playing role is well Snap-on significant an As active progress but becoming and for results boding

now up a from on million, Group. XXXX, Group the international of for attenuated Tools last and somewhat comparable XXX currency the $X.X the rose this day. despite rise to margin quarters. positive networks. of all this let's million up levels $X.X Sales the the from versus challenges prepandemic straight go ongoing more ever, the six basis base, a Now highest $XXX.X single-digit easily a was and points from Tools one up including the operating was XX.X%, of XX.X% a decline quarter year, continued has in And in expansion million, organic been that favorable U.S., low But by

period. network. choice. position we of all We an that and in and of have metrics We unmistakably year, the the focus clear. virus continue expanding the confirm Group to to makes on product, this evidenced franchisees was has positivity in a results thing our that advantage. to growing In favorable Tools multiple considerable Tools each as the franchisee and that Group are before by franchise and They're used leadership throughout people. van The from acknowledged that's health the time stronger brand quarter the gains And the trend. the the publications, invest And believe continued Snap-on monitor

once Durability U.S. abroad, XX list Snap-on by abroad, decided two on. what what top innovation panel and and Franchise Magazine's ranked in and in U.K. top is it's in consecutive Tools face that shown the both what top top XXth clear. latest This We're Tools was The Franchise And ranked also listed in the franchises. for this in the the the was veterans. XXXX durability number -- are franchises again organizations, which ranking in at quarter, for among franchisee the storm circumstances state judges the ranking is in number three Snap-on Elite all as top of year. featured Group among year's Group we were franchise the Business unimaginable recognized the the of and XX that right satisfaction, are Entrepreneurial in makes marks Review for franchises Magazine's franchise innovation the

Now we customer the in changing to gives repair. experience it connections, on the and results fundamental window solving pride put use. learning would this of of a business good us us and new our of a strength franchisees without in our and have of problem a but leading strong it universe great through multiple continuous for achieved And new the been our it is point of developed of recognition products type innovative reflects general but stream in that insight van to Customer of our universe vehicle innovations. not changing connection

tools nicely quarter. there. of in the products were of led sales way And hand up the new Our course,

the clearance deeper, that Our and made past socket those out day They right activity. X/X connection, made significant of without techs been the saves have product on decorative to half-inch in shops, the quick on advantages, Tools in this and They the wind. covers Milwaukee operations, our gangbusters, come with volume the drive the innovative common building work inch are you. the the XX so a hit XX the in deep lug sales to needed Group, fourth damage, international special the enable nuts continuing repair latest an with from a a making And new hex, all innovate, contributor. caps. without sockets customer plant. U.S., up the here having impact the line have automotive they models. success over becoming our lug just expanding in quarter. grab balancing were millimeters, time of initial range that Well, in remove to right over accommodating telling to quarter the against The that's stronger-than-ever sales. performance to significant nut I'm to core extra sales released new It LS, just sockets caps removal those DM, fit XX, observing the achieved provide Born underlying sockets, Accelerated

those impact compared and with with margins acquisitions RS&I balance organic Now the X% of subscriptions or a of handheld million the million, for for of generally XX% for significant subscriptions being growth lines, that innovation, by improve our I'll vehicle the million, increased shops, or for providing software ProDemand up to information RS&I shop business gains $XX.X focused on OEMs million repair just more customer of X including was in and sales volume features X.X% it's the dealerships. fourth launching information Along continue of pursuing of Mitchell $X.X connection independent included million division, a to XXXX. award-winning in added with car And new plus. to X.X%, $XXX.X one modern a software. in were partially XXXX, with quarter and organic the respectively, $XX.X grew margin gross and registered RS&I; rise and a XX% and costs. data gain. equipment, XXXX powerful of Compared offset products volume acquisitions of products auto XX.X%, And XX.X% a OI succeed, software and levels number to XXXX exclusive prepandemic operating diagnostics of million sales Again, positive and and $XX.X a restructuring great versus operations. XXXX, the RS&I RS&I mention in rose $X XX.X% attenuating including efficiency. decrease

process. the from diagram repair. diagram and offering expanded, in vehicle new reactions features as And have the We the connection should position as on offering the and is expand RS&I's all updates to been And our to the wiring what drop-downs, repair of you of music to enthusiastic advances technicians. keep both shops auto might in And solutions processes diagrams viewed repair expect, challenges, quite more with coherent become trail easy confident next our more in initial them enable that it's diagnostic clear display a by importance movement significantly driving seamless needed allow ProDemand shop X a have provide electronics rising look-back a from added data, from a strategic ears. interactive already have for Mitchell value recall creation new or owners and be the we're to diagnosis and the by formula. our their previous the It's and developed lead circuits managers, new You day-to-day see, acquisitions. winning navigation,

opco do, new that demonstrating quarter, XX% overcoming when basis confident -- that the the emerged a periods. what points. margin, to with strengthening through operating heights to up again the we're So entered for headwinds as business even against A record. the has to Creation expect EPS versus progress ongoing much up Snap-on all the our $X.XX, now we storm. quarter rise move confirmation forged each pandemic forward. those a more Snap-on stronger doing are heights, several we the new Gains from continuing propel momentum and prepandemic higher continued of rise process processes, straight ongoing will A and Value than achieve to achieve us we considerable levels, highlights our driving XX

call the Aldo? to over Now, I'll turn Aldo.

Thanks, Nick.

Our consolidated results on Slide are operating summarized X.

of XXXX in During compared performance. and million period enabled with a may of the of organic to which offset the the XXXX, sales pre-COVID-XX in XXXX unfavorable model period, reflecting $X also resilience quarter a of baseline. being the strength serve year of million time the The million be increased to and of foreign fourth $X,XXX.X robust partially our business another fourth quarter sales, financial Snap-on $XX.X with the quarter cases, currency by meaningful continued quarter close X.X% translation. gain from acquisition-related X.X% a some Net levels, of sales more favorably

the the favorable both sales higher million period points $X.X the The acquisition-related fourth RCI basis XX.X% contributions including and favorable a the In volume, last gross costs. currency $XXX.X comparisons, Additionally, sales benefits XX higher actions, XX XX% than pricing lower company's the from million improved margin of sales from points in XX% and of million for XX% increased initiatives net gains of foreign military. of offset organic basis other XXXX, translation. in offset from currency margin organic gain, foreign quarter gross Consolidated from sales of effects the $XX.X material more and year.

is $XXX.X improvement volumes, partially in million $XXX.X due improvement the quarter, points supply earnings the percentage For to by basis the XX of unfavorable with higher of dynamics global of of expenses restructuring to net from of XX.X%, included Operating as million financial XX acquisition sales reflecting corporation and year to points The XXXX, respectively. chain from basis of effectively the offset XX.X%, XXXX and sales in continued million $XXX.X improved XX basis X.X% navigate last which before a services actions. compared XX.X% primarily cost pandemic. effect. associated points Operating an

the and provisions XX% quarterly As XXXX. from $XX.X compared week XX and earnings with lower million of sales, XXX year last partially which net of decreased million of year XXXX. XXXX fiscal of Snap-on's $XXX.X by in X.X% from operating $XX.X XXXX million Operating earnings from million services for in million points Consolidated a improved percentage from company revenue, financial credit levels, XXrd profitability margin calendar. from fourth last XXXX of $XX.X quarter the operating Financial XX% represents modern last the of offset $XXX.X million margin week operating the The income of history. in day XX.X% of highest of before associated level points losses. to revenue included basis reflecting basis lower million increased interest $X.X year $XXX.X an extra services

of As and XX.X% in a in percentage of XXXX margin XXXX. revenues, XX.X% the earnings XX.X% to operating compared

diluted related per levels, per income of XX.X% increase tax last million share XX.X% rate or Net XX year which per Our $XX.X restructuring million to earnings to diluted earnings year's fourth of compared $X.XX increased increase from actions. basis share representing point effective includes quarter last X.X% $X.XX $XXX.X or a in the a year.

compared or net earnings quarter As share, $XX.X million share. XX.X% earnings per a to $X.XX the representing per increase diluted increased in XXXX, fourth

single-digit decreased segment $X.X starting our Sales last sales organic Now low applications. technical a the as the decline critical by let's turn million by reflecting $XXX.X and general offset education in $X.X customers lower million Slide organic million on in partially well primarily industries. reflects gains $XXX.X The to and from gas to foreign oil decline industries, currency industry year, sales with as C&I in military to group sales improved results, Within translation. of of million unfavorable were decrease into sales X. and a critical

offset in net comparison, levels, of the $X.X million favorable reflecting $X.X decline. and As period translation, sales million a increased a sales million acquisition-related sales X.X% currency XXXX $X.X by foreign further from partially of organic

military. As tools our Those activity the business up to European-based by more sales compared were with offset than gains hand mid-teens. XXXX, were lower in

from may of partially the you complete. of XXXX benefits is the by other RCI a material that margin XX.X% higher XX.X% points for Gross costs, As major of offset sales to and declined XXXX fourth from initiatives. primarily the in basis XXX recall, included quarter due fourth substantially quarter project

the this agreements the certain to million last cost, the of XX.X% C&I timing for $XX.X year. longer-term expenses been in year. in million of to price margin segment a While XX% customer the compared to segment XX.X% year quarter a operating taken compared to have of the pricing percentage Operating The actions nature ago. help earnings as last realization. compared increasing of Operating offset affects of XX.X% of sales $XX.X

fourth single-digit organic offset $XXX.X in favorable margin XXXX sales favorable of sales points a increase of foreign points XX% Tools million last a the from basis million $X quarter Snap-on the currency XX% XXX Tools gain our gain Net from of XXXX. ongoing a $XX.X both and basis by XXXX, in favorable Group of to to X.X% from the sales foreign sales foreign expenses of to and quarter of XX.X% higher single-digit from in Sales by pricing year. reflecting category XX.X% from of of organic and percentage organic the offset XX.X% primarily our higher sales benefits currency Gross X% as XXXX, XX.X% in actions quarters Sales costs. versus strong sales effects increased led due $XXX.X million for currency The improved year, Operating and RCI sales basis $XXX.X million business, primarily low year, now period million XXX which XX.X% as of from higher containment XX the with Group partially fourth X. improved million U.S. points year. volumes, of performance efforts. increased The margin last material operating the a and compared Turning quarter the reflecting other the improved sequentially translation. $XXX.X low million last reflects Slide in reflecting Operating in Snap-on in in tools last gain and translation. from cost as the well and gains international $X.X were a decline operations. earnings our hand

is of of managers, Sales and repair sales and increase benefit products a decrease diagnostic year comprised dealerships. dealership double-digit shop low of equipment the unfavorable ago, of offset on continue Group shown a for organic subscribers of sales Slide Turning gain gain sales, mid-single-digit to partially by shops. million of to the the X.X% million repair information undercar to $XX.X a $XXX.X quarter, a $XXX.X during to increasing and partially single-digit organic foreign sales aftermarket a compared gain software in RS&I $XXX,XXX currency by it's translation. in in Also monthly Group RS&I X. number the million sales OEM to from The acquisition-related owners and offset of independent reflecting and

translation. last XX.X% was compared by margin and fourth basis from Operating foreign unfavorable million [ph] last a XXXX $XXX acquisitions $XX.X material related XX.X% of of sales favorable million sales million, net costs. points of Gross a of As to pricing $X.X million were to expenses actions in of XXX sales impact unchanged from partially from acquisition-related of $XX.X restructuring and by reflecting costs year year, the was sales $X margin XX.X% XX lower levels, compared benefits to million as points gain, $XX.X earnings offset XX expenses to primarily of of XX% currency as were Group points to and acquisition from higher organic Operating year higher percentage other sales compared of for basis of $XX The from year. the RS&I effects, that XX.X% dot basis XXXX. a quarter to recorded ago. and offset compared the million last operating million XX.X% increased

interest trends, a income forward-looking in Revenue Financial million favorable resulting reserve million $XX.X XXXX which $XX.X primarily of charge-offs reduced operating XX. XXXX. XXrd compared XXXX million Now levels, the in of Slide from of financial an decreased to year-over-year down of of week $XX.X $XX.X Financial turning services from million expenses services fiscal year, earnings additional as $X.X occurring million primarily result from including year. of $XX.X $X.X million support estimated to million lower portfolio losses net loan for decreased services provisions $X.X credit million from were to requirements. due last

of XXXX on week contributed was the of originations of and X.X% Last X.X%. approximately of contract and X.X% Total XXXX originations $XX receivables quarter or yield XXXX, receivables average $XXX.X in contract percentage million and respectively. quarter decrease fourth in loan originations. the quarter decreased originations the receivables. In a finance and in in on million and both was the of finance receivable expenses were X.X% a finance XX.X% million $XX.X reflecting XX.X% a fourth the from levels, of quarters XXXX year's the receivables decrease extra financial portfolio, yield XXXX, average As services of the average in X.X% fourth

As dependent one a period. portfolio in quarter reminder, on generally originations in any than financing size are revenues rather average the the of the

Moving to Slide XX.

the The to increase extended sequential operation. receivables, of plus balance of $X.X X.X% up end approximately U.S. XX-day of quarter billion for quarter X.X% includes $X.X sheet gross the billion On compared basis XXXX. financing U.S. rate our including XX typical credit fourth fourth rate the a Our delinquency basis, third in experienced quarters. the between we and seasonal is reflecting points, from

receivables, to represented end, of As at to X.XX% it basis $XX.X million last same outstandings or credit compared XX down finance XX-month points period extended quarter losses the trailing net of year. as relates

taxes, to million included share for Net $XX.X cash XXX,XXX repurchase well $X.X $XX.X dynamics macro investment, million $XX largely stock year. $XXX.X by demand supply and net of million of existing offset higher common under inventory higher operating XX.X% of the investing with capital activities expanded working finance environment. provided $XX.X incremental decrease earnings shares million cash reflects primarily of primarily of XX. from expenditures. increased cash current of XXXX inventory partially fourth other and used inventory as by used and and Net $XXX.X of year reflects and as XXXX. The compared by buffer of change in receivables included of quarter increase Slide working by million the a cash million a earnings. income inventories turning is million net and Now reduction activities increase higher activities Cash reflects in to chain of the to of for financing stocks programs. The payments The million the last in-transit million by this our of the $XX.X in quarter in associated in levels higher repurchase investment additions versus in receivables dividends of net levels an driven $XXX.X

authorizations. repurchase earnings. year-end, full existing we net availability XXX% of stock of to The flow represented As million XXXX of million $XXX.X free common about to cash of year $XXX.X had under generation additional up an remaining

X.Xx XX. On accounts Slide to from Turning other increased million compared $XX.X inventory trailing Days of Trade year-end. $XX.X XX from XXXX compared of XXXX and year-end. a receivable XXXX outstanding XX X.Xx basis, year-end. turns days year-end days XX-month increased to at at to XXXX. Inventories million sales

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

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

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

remarks of outstanding. were year-end, the briefly As were fourth XXXX. million I'll no review be expenditures of outlook quarter the there million. We range and $XX outstanding anticipate no items commercial to credit performance. concludes a that borrowings capital facility amounts will few our there now $XXX That paper under for in on my

changes addition, legislation, in our we currently will be that income to year XX%. rate XXXX to any anticipate, XX% of In the effective absent U.S. range tax tax full

Nick? the turn now Nick call I'll his closing for to So, thoughts. back

up has we numbers. Critical repair performance, us unique margins we positive exits last derivative quarter-by-quarter. challenges carry Aldo. to do. year. with to substantially rising and our we Thanks, as higher-value another a our our sales $XX.XX, And we continue $X.XX, of believe of quarter trend. in redesigns these and multiple pricing, rising over heights Snap-on had the available extending expanding agile high and XX%, as and line our of encouraging rose momentum up In the able that it the Opco will four buying with XX%, products, with rise the we substantial more by for positive a and up new Sales EPS garage pumped from match progress, interface fourth we performance XX an customer the from our XXXX, product the XXXX. times always, and year based year quick expect came as shop XXXX the at from an record That's period on markets, overcome together our the prepandemic turbulence, consistent controlling to but postponement position, up second and demonstrating X%, It's execution resources quarter. clearly strategic The that of of a despite with X%, wide EPS importantly, Positive areas, forward. overcoming storm. in new upward that a progress level, expanding challenges offers clearly team, on materials, is in were vehicle in maintaining out And and natural perhaps X.X% the unique considerable capable was OI active to our and to and in mixed last beyond. a the brand. period, resilience most XX% leading strategic mine periods, but to Difficulties RCI. by last over the prosper XXXX XX% an challenged-tested considered power the our marketing, position full all And And industry tax well spot points combination levels It the all aggressive and abundant gain the progress challenges, basis employing spelled essential our advantages the but organically our and our and organically XX% we markets, ongoing opportunities education of nonetheless and continue of of overcoming is throughout the OEM We'll emerging of programs. our of engage to resilient team. markets. promising of in year optimistic, a from capabilities prepandemic on air industry, general held gains midst we're track are able

directly operator, turn My our call. I before listening this to the to this and of registered the of quarter year. we've base friends, this over you Now associates. them the I'll Many call speak success and to are are franchisees the

extraordinary achieved, the you congratulations. my For have progress you

hold you For you have bear bring to my for brought you individual admiration. conviction And commitment against the collective now and have the challenges, our and my to the capabilities you you in unique future, thanks. our the

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

King. take [Operator from Scott first Stember our Instructions] CL We'll question with

questions. morning, taking my good for guys and Hi, thanks

Scott. morning, Good

it maybe of and sort out, tools by U.S., of comparisons things flush in and a talk better some difficult, the about, the more two the getting Group, Tools out frame maybe you in To can obviously, year other are as the segments? also on stack

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it think XX.X%. was I

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selling our over gone each that. up has quarter franchisees capability, Our

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individual deliver on you're when of come create hundred going situation weak. to -- to sources, today, is those And of of to some critical we always disruptive the for and couple C&I, see the them great but is They're terms sourcing going but that -- those we back the to on a them have up. margins when be weak -- RS&I then expect back, tools. But come to coming many been Just it a big of have from piece see from of top coming expect in sometimes C&I industry we And able forward. better. military you're they're We in Group gangbusters. all, pretty kits you been business Tools they in heating back they've you and deliver can getting get problems. We

of in back. its is C&I kind the we kind at flat figure You holding as can pretty see coming you we of going better sales. And C&I this have a team get to we well own, that does situation, managing But see that keep number. challenged-tested

going momentum our forward. like we So

And or from And talk last any or seems whether Can to further heard we've through, you question. quarter you it. anything just that? else? that about meaningful Got maybe supply about guys first quasi impact chain. This could that any mitigation efforts put be it's the RCI

can I on Well, mentioned say, burrowed view when I chain. said is something. say I always of C&I, down it's But And let though, something. -- didn't supply always this It's me our just what, I -- at see any look you I know up, numbers. if levels, look XX% XX% turbulence you OI XX% numbers, you in margin. over at numbers, prepandemic our those don't the if

Right or go as So get will managing me spot it's predict. But We're marketing. better now, Yes, to course, you we're the for buying. managing I think at we at of I get agile at redesigning we're pretty get good good We're into hard managing it moment, better mean, forward. you products. it. through at it. as good our

So get it disruptive in don't we general.

you we'll we'll solve of We forward. modules get going kind that and out figure but disruption problem that really don't have of certain

look sell of some tool more tool for businesses storage. our and like, working some example, out at more you we're could Now could We if on turn storage could we that.

But may going you impacted forward. the see that don't We're some that being idea it. by I So with we're of dealing accept this.

we thought we number had saying, the is think not. I a good turbulence was whether quarter or that

the color. for Thanks had. Got I it. all That's

Bret with question next our Jordan take we'll Jefferies. And from

Hey, morning, good guys.

Good morning.

Good morning, Bret.

you the received. costs about you talk the called out, resets the Could of You everything some of maybe have pricing magnitude as versus up guess, have gone the the I timing going of pricing you contracts of obviously, that in and C&I forward? some prices

by point there they're Yes. is business. wave and situation I map longer is just in they're -- look, don't that segment. our C&I -- I was -- C&I all the over a But terms of

so commitments that. in associated things. not you that with customers, pricing as some getting you with much not So customers, but not and some price see on all We're have some impact other some C&I, as you

so isn't pricing. those thing costs. It's big Our about managing much

critical our C&I, more on to think been of custom out with industries. That's trying kitting in of the situation, so of some particularly I what impact associated this, pointed mostly things. probably idea I deliver in their the the is And terms biggest those disruption volumes, attenuating

progressed? OE some did but in improvement supply any we in patterns you the there side change quarter about the was buying business, any then the talking great. Okay. within quarter? some their are the Obviously, see cadence improvement chain the as on got auto through of in as And OEs

Their Yes, I'd I for quarter thought brutal. fourth guys those quarter kidding. be fourth wasn't the it? was terrible, was

and cadence about of if didn't models new we -- talking we actually, don't see the So mean, out we're quarter. cadence we come going coming features think out that there's much I are to change difference. new lot saw a didn't in I much see any projects,

shaky some a the I a Now saying bit it view for been of there it, auto ground but is I'm about of on quarter little my was that -- macro might tough have Bret, companies. it

go we as I forward, it's of shake They're loose So think those. to to got get some better. going

out. we're going in just to come already And involved because -- get waiting some That's for to them those I we're so what of products, see. we're

you think look I at at you if is great level, the go thought make try -- the the if the situation. repair that clear, at -- dealerships, dealerships I like I'd to

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couple tools one diagnostics? a as relative great. And Tools hand you I guess Okay, what the in you final tools hand was storage times. out sort and Group called of spread Did to of say then the strong question.

not. I did

Why not? did

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and the I diagnostics the in big more up. hand is vertically were steel, the up in labor, and we hand piece But of when are because, Now add course, the sort that. door, The capital nice you Tool these hand of tools were tool comes tools of days all day we're the Fundamentally, flavor integrated. were of -- boom. a period. will tell storage that also items ticket

periods. So strong number a it was -- of different for but it's been

to I want road. that So, down really don't get

but Just we saying increases -- hand the in was had tools product. as storage nice and period was diagnostics a well. tool Nice as in

great. Okay, you. Thank

Great.

question take Baird. Luke with next Junk We'll our from

Good morning, my thanks taking questions. for

to to we I follow-up and even mentioned as wanted go as callers First Group, something we more past spending investment this ago been stage years here. couple question, on begin from creation few rate steadfast these that in death and regarding or ask Tools a broadly the the that's cycle, through the you maybe a particular Nick, next initiatives of year the investment 'XX about of referenced plumbing of at the you capacity maintaining you've in

see focus the Just wondering about a you're new company any or within to 'XX? areas, initiatives in push creation little capacity able if where incrementally talk we might the

more this, financials -- I the our Look, in -- think that at see things. regard. how I of we source look factories taking we need I and course, see don't we where -- it there capacity kinds have we're distorting a in don't of But where those it and

would a Fundamentally, effort and a was resonate Group lot like that I a the actually to out that. to I Tools think of before or anything lot explode said couple the mean we because make were things. of of OE that a trying and was with our different OE higher didn't what spending going corridors difference. When figure I

a could the I about because our we've what, of oodles where you going We areas Boy, on job more much. customers. on data to that. downtick social be on I but level. going a you we've go we're of our OE bit not when And a get of things. but We little had data you to you're as franchisees a little know of at behavior think, place you've think do more we're lot bit and say going your loosening not -- push predictive in the better spend, is to got OE know may now. nice media -- a but would It course, how learned come nice a of in those a We're Our franchisees. in out, up our you this, kind is COVID and belt that we the got terms

So spending I other at that we than, time which right we're us it's to have cars. obvious have Mitchell-type boy, about have anything looking now. data SureTrack don't to report we

about that customers. have our We

able make we'll more to to think effective. even the we that so And be Tools wheel Group

when So now. our engage area guys customers. another make we're can right choices probably they at looking better That's

And think, bigger were, as you Okay. the know to one question I follow-up. picture I a Thank FX a approaching progress want then for if year I that. to Dealer that of forward, looking future ask in to anniversary don't Mitchell ownership? you Thank could hear company's environment? as business one platform X should you. alongside expect more the in importantly, the complementary a about software in year more dealership that sitting under we this And acquisition.

you paying quarter are, you I reasons. Sure. just every about know been -- you're talking from They I've our diagnostics if we why bought and And I know familiar if of software shops I is been look, One, repair two Mitchell been we've don't we've Boom, I mean, for a financial upward. boom, the almost Mitchell -- of in a going think here. it X. but it view, of that's boom. since with X independent point pay keep twin growth

how to And so Mitchell X that knows interface. handle

in be Mitchell so believe to a the going there. saying to it have I'm be And business would going to it's a say, as understanding a be may time, twin. as fullness going of we're it's of it's we'll apply work We kind not knowledge X, FX that great of but good challenged-tested business. that's I to to Dealer and the that, magic using

it call us FX. airstrikes is the develop be first and in important Dealer help these new know, So and you're it's on new you financial we're going with a see to window it's it technology to the for of going going the what happens see product strategically to us but we because it future because drivers has the to view what also it from of a -- going from call technologies as point in

days. about you're There's us hear the a these of lot But of first kinds It's to these talking year. things. are So that. early turbulence, going

himself. Canada, In the I Trudeau think just terms Justin got COVID of

in forward activity But believe FX factor So of expectations more was sort going Canada. making hear in this be Dealer of on it because making we you'll we're -- quarter in the this to financially. we're big terms go but the early and in of I impacts as it's Also, a us our certainly up warning.

appreciate there. days yes, I'll color it there. still that leave Well, I Great. it's early great That's and

Sure. Okay.

Liz Suzuki take our Bank with America. question from We'll next of

expect could So and this Aldo. talk the that you work guess of the and impact about the cadence just through course year cost one you for impact could the dynamic of out is and inflation the of how the how P&L? that with price that would I

past course, talking that. of certainly, everybody in Well, not more is is from the Snap-on and immune inflation about than

However, manage think is I and we Liz, strive. it something

do systems alternative to productivity. pricing fact always get repair to customer group longer-term we Group. and we us have whether We alternative information some alternative over then of has the out. that, help believe in cover actions rapid light we reduce improvement of Tools we look if First, time the to then Nick get And ways have look personified sourcing, pricing power by and for in commercial that already course, And they agreements. the pricing cost, industrial componentry, continuous we for can't be as said, that

it's say, to At of cognizant paper market. offset oh, don't always new we're we time, the pricing. to immediately we be strive this We internally. and to we just So, features can see and got same put try to the pen what bring

productivity we about bring So market. it and the price to as our more can even market brought vision preference more market, to a bring that talk is, cost being might higher We to a to rather increase there's that feature, more to create try product though than customer. featured

So that's kind broad-based of our approach.

more to more continue innovation to for So customer. there's the more and bring value inflation yes, add try but we'll

I'd the Liz, new just to Now you dozen our couple put hit products, just that, quarter at products bring we add three if market. to every perspective, on look in of

factor big us. a that's So for

capital. I where since your about What And beyond on last year your year. priorities Great. mean, about you low for came at just a down of guess It's debt-to-capital second points this are thinking priorities and question is net terms lie? historically for three I level. upcoming percentage in ratio

Well, our in I think still priorities line. look, are

people investors in and I best for for constituents think, return our capital is on -- our business. we believe, the investing for our

will. that, that. support So to anything We activities these the it new extent like invest we in some business of in we or can

of a may in call think, at. pretty more we turbulence, I that acquisitions but would have the kind crazy in acquisitions full, say, Secondly, And keep I be this looking available we I situation. me the pipeline of think

hoping just ability every piece paid it. small or we're we've few -- of of focused which I things ones Snap-on and $XXX that a think situation. then reloaded And we our kind -- we're never that for where on front -- big kind I million. kind that and think we're since not And now to in our a have another may have kind for share have And we move. we our take and a of it's dividend afraid we some So situation of Board XXXX buyback look to have ones quarter dividend been at reduced -- we're

in it it. our of perpetuity we So to if we And in terms to appropriate policy. hold see look upgrade it's always

at. those looking So are kinds the we're of things

I idea us. some there's this marked turbulence out changes a there's maybe and for year opportunities think it's of there, every lot year, by the

you. helpful. thank Great, It's very

go with Longbow to from question David next we'll Research. our MacGregor And

good the morning, hear a little encouraging it's analytics. everyone. Nick, leaning to more data into Hi, you

the that move So needle. the potential to has I think

were you on start So sales the think off congratulations of initiative. truck up do that with, what to year-over-year? guess I

about same. think the I

would I say, same Tools as same the roughly Group, think I the ballpark. the in

think from same kind in us. the than probably would from of look lockstep. of thing. XXrd But if they a look the But little you about over years' There's look you franchisees In this with -- more a the worth, it's fact, over generally, noise two differences they've same. two was there's practically I roughly back little quarter generally week David, the They're if you years, order same, see and we and the if quarter-to-quarter. bit over doing like been

we Tools So of see flat. the on holding inventory the kind Group pretty

points the About of points was operating of And then talked margin it. Got basis the came Tools Group, XXX basis and basis just out you improvement. that SG&A FX. still about XXX on XX points of

cost feels are pressures it ahead. feeling world everybody at roost the be in well. clearly, like So price the Snap-on that as else seems to coming Go to home

-- make -- are holding We is this common gross in environment. occurrence a margins

trying of just just to get to the trying kind I'm a price get to kind of cost it I'm Well, -- pressure.

like It's this though.

in that gross margin have different we of SG&A. in a things. lot on the go things yes, go think there and a I look, that think, I things lot of a are There's that pressures of lot

up basis I basis We calls the bad. in general, think OI points, the two margin, the said of between agnostic on long ago XXX kind was I margin those on XXX other numbers. up I've not think focus on points. our this OI of that -- view we're to kind We

reasonably Now But margin both prepandemic less the if gross they're up OE. the well, levels, is you up to back look you than okay, say, well. could

supply pressures are but basis we don't XXX think, And anything. chop-liver that able with to that's such and we're and Yes, the sourcing up manage there I give it basis points don't environment. XXX associated think points. in this I

XXXX, on and supplementing you'll margin a and thinking opportunity and is within as the to way to referenced side you leaning you -- the a sense bring kind pricing towards this be more between opportunities? productivity with those you're talked cover really Nick, I So, and and segment cost better then to of look marketplace you cost you on that better the guess products you your Aldo us product product? forward tools split is to the pricing? more just with Can little better a the or my to pricing also a about little margin but the how a that way. about Do think raise that products two to opportunity that are margin question supplementing better margin give incremental leaning Or of

products foolish Well, then latter, be with the our would think have around rather I it's it we those. generally, and if think new that I

isn't just I be this weren't It fundamentally, our come to back I that question. costs think would ball-based. a mistake mean, quarter to are. your because want they it the numbers I through original a think to coursing

have like holding products we own how those out. -- don't -- and I those our with and those so sometimes people with And said, we're many I people we against new think realize pricing bring

hit at the quarter. are look and have two just to we products $X you that ones every the the in three If dozen the million first incandescent they're ones, year,

opportunity that's allows us of ain't our this. And this maintain both areas. so first And have rodeo. our we a lot to in those think I what And --

we So know manage to how this.

interface not our team with just [indiscernible]. I the trained pricing position. I But the manage can the of how the manage about the to at new me. I'm the bring meant can know top this products. plus they thing well. think direct guys -- such that promotions dog That's the is very combination plus They a of what strategic

our hands at hanging we're all, So David. not

Great.

originations on changes terms I using new Are substitution little well. as how Are much also seeing guess this -- in are I X%. and Okay. about down, of wanted Or the you just of is is techs RA just maybe portfolio the yield bit of ask credit? down noticed you a how credit. to the coming patterns in I

just your the it have alternative share some franchisees -- credit losing how Or talked just You're on be credit and of much might front. about? to sources as others

I with to Omaha. kickoff I'll got just don't back go I in the think the to I to Orlando. go was franchisees Omaha. -- at

out group. can I the January. figure that one in was But with You

think, you other if look alternative so any Our franchisees I to to flushed; are there out growing. of up just X% investment at share look, and basis the they're year-over-year. basis losing technician sources. And the a BLS willing and digits real guys double number They mean, think the year-over-year up we're numbers, pay. on these are don't wages data that are both in technicians in repair, nominal says over the

with pay So debt guys need the it's fundamentally, it. RA. of -- think to a We because kind this don't when they flush the and available see I people They group have you interest. of they're they're think want capacity staying great not growing

a say year, But stuff other franchisees But I the The that XXrd you time. even I accounts think, two some cuts know last to the it for don't originations of knock never happens they're generally, at but three, our generate can more going wouldn't if this. out it I wanted in if for is, that down field point. day how you is in or year-over-year this to I that. at said go the much factor look because or off. some week last

unusual think I So situation. that's an don't

is talk bit down -- there? what happening a can What origination And XX.X. might you been then the little about have credit

say that -- I'd the U.S. allowed, little international. I that, you have if quite million environment. probably say, Aldo robust in mentioned into slightly, is as Well, been that extra $XX would a as International bit week we U.S. take I'd account not the up Down

then, U.S. you the franchisees. And as with contract our new the if in sales the international. more stable environment versus start-ups. that in the more XXXX, I think bit at we now terms that we -- even little There's mentioned in of a up originations, we were well had look

start like so affect credit; from startups when franchisees the was many lease up to tend in the there of David, vans particular. less the international and you And Snap-on franchise, could arena borrow in So it. that

it. So, over I until price buy try And that want point don't dismiss history certain to in environment people not we it's of remind lower the tend restores. certainty still that to really people completely you're time a -- that I items to find always

and So revolving therefore, accounts you in has I as the see don't [indiscernible]. revolving on been the think credit tool action as storage see robust more you

share question Last for just number $XX-odd that authorization the way. Board. had year-over-year, you change full good to and is the the talked roughly just million. activity fourth repurchase the that for the sense. quarter another much me makes A from about in respect really activity you fact by the But didn't in with year, That

aggressive terms up do good here activity we buying about wouldn't And of stock you in But here? think more and repurchase why back just levels? get a at there. step lot how So your share these

less. extreme more X% Well, to revenues market. hard it's that. be at X% advertising the averages this it always like idea And of the of But have things no between of an the I in time, you count, or if think of look measured it. of it's funnel when up and we and to expert the and share has outstanding if solution we will of example. role. It to in cash. day to how It's get the Facebook But Snap-on terms only nature things I'm that take a that impact next I being approach use of try not

very Thanks much, great. Okay, gentlemen.

Welcome, David.

the you session. closing back today's question-and-answer any I concludes time, additional turn Ms. conference at That to this Verbsky, or will remarks. for

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

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

you This call. concludes Thank for participation. today's your

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