Snap-on (SNA) 20 Apr 232023 Q1 Earnings call transcript

Hello, and welcome to the Snap-on Incorporated 2023 First Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded.

I would now like to turn the conference over to your host today, Sara Verbsky, Vice President, Investor Relations. ahead. go please Ma’am,

morning. and to everyone. results, review our earlier detailed Keith, joining which you us in this issued release today Snap-on’s press good you, Thank morning, for are Thank first quarter

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

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

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

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

in is these found regarding information release included our measures earnings on which issued Additional be our today, website. can

Nick turn call to Nick? now Pinchuk. to like With I’d the that said, over

Sarah. Thanks,

morning. As usual -- Good everybody. good morning,

on of the Aldo you first vibrant. markets, view the by momentum. means. call the give the been unbroken the We’ll a give what the gangbusters. cover quarter, perspective our review we’ll will detailed the provide it also I’ll and then and of financials. all way, start of robust highlights a And my you I’ll usual, Along It’s As covering

our resilience. of quarter is story continued the again, Once

the new while of the flip navigate bring a the complex to calendar knowing with challenges. of Our ability will flip -- calendar that a

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armed we’re see, advantages. You significant with

experienced, world our Our quality our above criticality, critical and finally, market’s products. resilience; confident. personal making and team, the our of brand pride; the and displaying delivering out forward born easier; reinforcing capable They clearly standing by our people, move

this you and by quarter, tell encouraged I’ll why. are We

the or $XX.X period group, sales, they reported basis up quarter our operating consecutive versus Our including sales in were last increases were XXX $XX X.X%, or in million foreign unfavorable exchange. by of year-over-year XXth expansion. $X,XXX of XX.X%, points million, every Organic up million year

Our OpCo was the over increasing for margin currency, $XXX.X by including it rising XX.X%. points quarter margin, of operating foreign -- the last million, the income operating was unfavorable basis $X.X year. And XXX operating XX%, million

from with combined of And that first operating consolidated with $XX.X the quarter’s a $X.XX, resulted -- that OpCo or services, of OpCo in $XX.X million margin last to EPS, an million. income year’s $X.XX financial compared For improvement. basis-point year’s XX.X%, and up XX And combined $X. XX% operating last

clearly by our justified So our the optimism confidence we numbers. is believe ongoing and

all The markets. let’s Now, across look remains automotive hot, disciplines. demand our closer environment repair at

matching the in accommodating complexity. continue products new increased models, of and repair We newer investing challenges the

bring pace. we’re and change, ready techs an we’re combustion the accomplish engine need to an Whether keeping the and an platforms task modification it. tools or requires the As electric to it’s internal new vehicle, assist,

torque challenges -- More from of that spaces varying requiring computers install instrument wire. for to confined new increasing designs can tighter parts and to challenges, range accessibility the to engineering manage precision the drive create of tools the communicate updates network geometries, the power with of fasteners issues greater and our of listing the for sensors. software and with The new a challenges, remove neural associated number rise need by the efficiently to electronics, and more of diagnostics special need the handheld electronics and the fueling

We’re seeing dealerships. OEM strength in

new of As service unique essential and models each arrays needed new to vehicle. and equipment are to the break characteristics different on of market, the tools, diagnostics

shops, For booming. independent repair is business

enthusiastic, this robust. further Owners course, this need is technicians. all the see expect, And count then, rise numbers. know are growth. is out and for our they hand, are And parking with service, they the shops all pays scheduled in the are the demand in might for franchisees, If Garages you full wages are I to you’re taking moving recently, the of written lots chockablock. They is witnessed It’s and speak are first your of the substantial ears. saying as tech up. when vehicle all you’ve And our over the types. music

we repair believe new We vehicle say may be it increasing growing entering rise numbers and and automation, need the our vehicle with of be the the the may complexity, precision age golden models, for the that so. of vehicle

So people & Tools place better. RS&I. getting we only Group, to believe repair. for It’s Group Systems for operate Information and our it’s great a our And Repair

out the all -- presence. The but industries down, consequences, demand. critical global sectors, still up. industry of with encouraging. the education, we’re general commercial let’s rebounding military, is tasks take industries aviation, C&I, and where kept is most garage, an headwinds, to once natural high our heavy-duty fleets, across or reasonably I rising now It’s And Snap-on news critical representing and suppose, most Now, solving the area subject significant about of where talk industrial the international resources,

C&I every and of showed strong. markets Pacific the And variation the Europe North Brexit, revenue But improved and America of face disruption broad and -- the ongoing was was significant landscape. mixed, positives, Asia critical for the even ongoing in Ukraine geographies, the war the remained in across of overall, industry of sector.

see in we the strides and marked on horizon. quarter by more first The opportunity is that arena, substantial

standing there’s managers, productivity our generous industry and strengthening connecting task, emerging the believe brand extending repair we insight continuous that And face-to-face van runways expansive expanding applying margin for in amplify in are workplace building turning improvement, innovative our professionals. customer, and products that and tasks into critical in or of upwards. some all for where the the RCI, observing the by we potential network, and the driving along our call rapid line, work, endeavor a deploying and our We helping the shop markets, it, new of understanding product as the the future to performed, increasing growth, wielding the ongoing owners abundant our with leveraging enhancing and

So, that’s our view of the market.

operating income $XX.X and way. unfavorable XX.X%, to $X million Now, C&I’s of and points let’s of represents the last up foreign sales groups. the Group, over currency, critical margin leading that XXX last including the were torque currency, level, of XX.X% with the including basis up turn million, increased industries was specialty year, year. precision C&I unfavorable $XXX.X foreign double-digit to in X% increase operating from In million, numbers. Organic promising XXXX $XX.X XX.X% an of the gains million sales

despite the ongoing growth, uncertainty considerable demonstrated geographies. C&I across

attenuating impact availability with disruption. drivers many customized customized vulnerable C&I the turbulence. along improvements C&I been say of the on products one to heard me the the behind calls, were you the The different are was -- kits supply in And supply of it factors One recent the of that’s the past the the chain. rise

we period, the the the During impacts. started to and logjams reduced clean

The progress. first quarter is evidence of that

products drive It The sure specifically torque great continued designed been aimed making strong. product. it’s we’ve our ATECH aircraft the inch -- the becoming a a repair a micro in new but necessity TechAngle critical with and demand increasing paths. time, spaces in a is It’s at example is and directly more said precision that where quarter. have first need initiatives common. for for some difference For in wrench, is mouthful, tight X/X positive critical And at power One innovative is in aircraft that flex-head repair repair rising. rooted the is for torque

three new works Our on unit all fronts.

tests tough wrench. new range from time, by tool cover, making into to that power, productivity equipped X almost uses diameter than but gear tooth operate XX-inch tool mechanism, allowing XX durable eliminating reaching long, ATECH XXX-inch inch the it the The enabling providing inside can nice facilitate a the over in it foot it design, to applications also restrict less power, providing expanding to consolidating motion, our obstacles. a flex-head access to wrench new change it’s It’s devices one unit and an when multiple -- has with avoid The deep number engine increasing of gain. And significant XX% that’s compartments. -- barriers the with and is convenient rotations configured and XX-degree small

visibility The The the Well, even LCD, drive profits, rise, quarter. product to with sector. the the the plus audible. to hit X%, in accuracy that’s unit over the four the stronger that prevent has products or combined fastening X helped upward powerful accessibility, of more another and alert come. vibratory on when It’s and is low and LED, served power is spec. aviation minus protects on right accuracy space modes, torquing, unit’s the throughout and higher Those keep this ATECH C&I feature constrained. C&I, And sales, when

international single-digit XXX great the in operating X.X% -- of Tools $XX.X currency, Now was against the million, million margin XX.X%, $XXX.X was $X.X Sales of of boomshakalaka!. margin basis and registering single-digit currency, unfavorable Group. a up This basis in for increases points us. organic the with a U.S. the and low rise a up network, number points on operating high gain including to million, the foreign unfavorable XX

markets opportunity. resilient again, this. We’re it path once by The numbers an really and encouraged and and back of tools up. are strong they ongoing abundant trace repair the vehicle And optimistic

people technician the boxes. can longer evident for repair product all I was storage seems way tool positive. for But items, without the or And great say from diagnostics without forward. payback some They customers They van and high results. are was week. word have with big question. expectations to tickets, to shops like positivity lines top continue their brimming It our in contributors last our beyond are be All the with enthusiasm only is view demand the And and -- vehicle major quantitative equivocation to confidence. bottom drivers That’s the evidence, -- their are the busy. use, our our in I that of of continuing product just incandescently

diagnostics the it handheld see in success of of the line top can the ZEUS+ units. You

You our to of can EPIQ the find the storage lineup. it in tool reception latest addition

securable a edition not place, color black It’s storage trim, a tool giving body EPIQ generated make with toolbox, organizations, box, statement. of illuminating tool in power like It chance Even box, considerable I the in we the shop, -- tools a range newest a the call light baby functionality. top The a with at offers look, this the excitement it’s techs customizable speed say, length of any its glow. a bright [indiscernible]. the they repair space, storage making shine and to with XX-inch LED it limited them mean drawer shop spanning out also drawers are. than eye-catching the providing just Neon charging less the of The the of drawer corner stands entire power pops. and And powerful gloss a fully a the Stinger. it the to a jewels

ready accessories a are The blink an was tech and was Snap-on X power all outlets Stinger Stinger, go. the the offers to ensure -- and and you, hit product and USB of eye. it ports, tools, cordless I’ll always a tell charged million-dollar demand a strong also lights to in XX

train the kept robust Tools momentum So just all segments product throughout quarter. Group, in demand running and the the

undercar improvements Now lines, million those XX.X% division let’s reached foreign customer XX.X%, once increases million, RS&I. rising to efficiency. in business again, up game, speak double-digit and of up XX to earnings information equipment independent big continue software Mitchell software XX.X% two million operating OEM shop basis responsible succeed, Organic -- $XXX.X the quarter, a products Again significant were $XXX.X contributors. driving plus. currency. margin subscriptions and with our activity the is this year, repair RS&I operating and bringing in by including and Along $XX.X connection innovation were new X to last providing for points. shops, great XX.X%, $X million, was Sales unfavorable or advanced over pursuing

quicker council make or combustion time ever a more wire wiring by transition for to saver And software in on is complex at technicians would enabling our the powered of It’s heavy-duty across world, following electrical vehicles, trucks. and whether truck significant X shops a easier this and from the introduced navigation year’s to real the features challenges immediately maintenance noticing. technology professionals battery to quick meeting difference. views. this of example It to specifically the it much feature today’s truck year between Mitchell an for was -- powerful significant new wiring aid large The and -- for to makes issues repair the truck Orlando, clear that repair our without a cells. techs are This the the interruption industry one another, diagram navigate is internal

with Mitchell diagrams, collision just of collision one needed information system overhaul click of work retrieved all relevant repair automated new illustrations It’s The function another its button. released the X gathers great the with a product. the software. button screen for into procedures, click for one and package jobs, all

is multifaceted repair the collision in that the difficulties the of of task. nature One

details, separate in varying the vehicle’s diagrams, is part within need procedures, but found repair places documentation. system that information You categories in usually

It’s the Our minutes that’s single an will combines in progressively really to be to the an comprehensive But the repair. area believe growth. test. new package big in the that XX a contributor vehicle the repair a data consolidated in effective guide repair. work system rising that’s prepare information eliminates a Mitchell It simple. needed collision We XX for to into the savings software clear ordinarily technician through modern fact, effective guides sounds that X’s

on of target repair more associated of feature the the the new increase right and sensor networks, vehicle ease increasingly is With our and to growth collision in is way. important, automation

We essential and Snap-on solutions value keep expanding to and drive software owners repair and more keep processes managers, RS&I. challenges, with winning offering components hardware. day-to-day shop creation, in We position wielding customer expanding the more new and RS&I’s to for of innovation connection

that confident. view. successful formula results It’s RS&I reinforce a We’re and

So, those are quarter. highlights our of the

momentum. Continued

clear hardware. is period a up showing straight EPS Group, enhanced XX% against software C&I in the operating more, van rising Snap-on sales gaining over and provide stronger healthy for OpCo year-over-year quarter, turbulence quarter. that an It It enterprise the from all entered serves trend last a is to year, supply strength, The evidence up. of robust, of with all that and and conviction. withering powerful XXth the day, emerged COVID, Our than increase. up and adds XX% remaining continuing with upward operating the $X.XX, has and the encouraging growth. margin it the RS&I aiming network, and in Tools significant was organic great testimony when capability XX.X%; It

I’ll to Now, over turn the Aldo. call

Nick. Thanks,

results of quarter operating of million of sales reflecting Net this Our unfavorable gains consolidated increased summarized levels, translation. points on in gain, organic slide X. currency XXX partially a by XX.X% from organic segments. or sales X.X% basis across increase XXXX million sales $XX offset includes The $X.XXX broad-based are all foreign quarter the the

pricing of Consolidated organic year-over-year growth America experienced gross gains From XX.X% perspective, Europe. organic margin sales higher in basis basis points other North the RCI material as from actions Company’s of from we than offset volumes unfavorable last XX a and single-digit effects Contributions and benefits from low currency. improved and XX.X% year. of double-digit the foreign initiatives points and the geographic as sales costs increased in XXX more well

Operating conditions. While quarter challenges effectively corporation chain somewhat improved $XXX.X in points services navigate from million other improved, earnings with compared financial of XX.X%, percentage last of associated Operating XXXX. we the of to and basis a continued million expenses environment to has sales costs ongoing $XXX.X before XX.X% net the the the year. believe XX in supply as

quarter. XXX services As of improved from last XX% year’s before points a margin financial sales, basis of net percentage first operating

million we to X.X% XXXX of what year. the first million more normal revenue quarter Consolidated than increased credit the level return of those last compared $XX.X for compared of million last in in to to earnings Operating included recorded to be $XXX.X believe quarter year. year. levels million of $XX.X Services and provisions losses XXXX last from earnings operating $XXX.X a $XX.X decreased million million a Financial $X.X

points As year. improved operating the last margin a earnings basis percentage of XX from XX.X% of revenues,

effective associated a XXXX million share earnings from million rate XX.X% per increase Our quarter year. or $X.XX including or XX.X% of tax unfavorable first $X.XX foreign currency, with per diluted diluted compared XX% last Net $XXX.X impact in $XX.X levels, increased of share. to income $X.XX of per share earnings representing

in XX.X% last Now, let’s with turn torque reflects in to as or customers $XXX.X year, $XX.X X. tools currency primarily business. million million and Starting C&I single-digit specialty segment’s gain, organic increased Sales translation. offset our industries segment sales by the results to growth $XX.X organic sales $XXX.X as for a the low foreign million of the on gains critical which European-based unfavorable well in quarter. from in increase double-digit The was business partially slide of hand segment million reflecting

critical respect quarter. wide industries, to ranging With were the gains sales in the

activity military primarily natural the including higher XX.X% increased to initiatives. and higher improvements improved sales were of was of benefits offset of sales from XX.X% the to of addition to and pricing partially These XXX actions resources. In and margin aviation in were were effects basis as quarter Gross education, volumes costs. higher critical higher activity gross general from sales other technical robust across due and first the industry, XXXX. material the industries, This by margin RCI points

year. basis sales earnings segment expenses XX% the and as improved from in last quarter XXXX, points operating XX.X% XXX million of increased C&I a the expense The year. last due points million margin for higher of $XX.X in businesses. Operating mostly XX.X% from Operating XX.X%, increased increased percentage $XX.X sales XX to XX.X% of of basis

the offset Group million a sales $XXX.X currency increase lines. foreign quarter is our ago, and a translation. benefits other gain partially organic to effects. our points offset primarily million in year all Gross XXX from reflecting Sales year-over-year This quarter basis X.X% partially unfavorable increase in and high X. Snap-on pricing due organic in and year. XX.X% RCI of Sales low $X.X $XXX million growth reflects The in international points sales of compared Tools operations. material costs by basis product to from a sales U.S. XX slide were of the currency improved to gain, and a actions, business margin lower unfavorable in of up XX.X% higher single-digit by now Turning volumes single-digit last the in initiatives,

of as the margin were earnings Group from year, of unchanged Tools Operating basis XXXX. a basis foreign percentage sales XX.X% million, last from XX while improved XX.X%, including operating increased the XXX of $XXX.X effects, Operating of XX.X% effects, $X.X currency year. of from unfavorable expenses currency of last $XX.X million in for points Snap-on points million including unfavorable

as and as from in businesses our declines pricing points due basis the information sales slide X. Gross sales higher the gain margin partially savings initiatives The double-digit Group of currency and of XX XXXX, of on OEM managers. from favorable $XXX.X undercar million from margin unfavorable currency of shop $X to XX.X% and from organic costs. $XXX.X gain, to and material a effects. last foreign of offset well year, in RS&I equipment Turning with Sales reflecting by sales and lower gross shown translation. partially XX.X% were organic primarily declined and dealerships repair points XX.X% of million by million and other actions mid-single-digit comprised XXX diagnostics activity sales to and basis in independent collision RCI the XX.X% effects in gain owners increased is products of benefits increases repair a of These increased offset in foreign

from $XX.X to from from percentage RCI reported RS&I a XXX due initiatives. higher ago. to the year. operating $XXX.X leverage million improved earnings year savings primarily compared last for and last to points Group a The of and businesses of activity XX.X% Operating volume million compared margin expense XX% of as XX.X% benefits sales of expenses year, lower XX.X% and Operating sales basis

increased $XXX,XXX Services effects to in we of of rate loan higher of $XX.X to as of $XX.X turning normal $XX.X million million expenses XX. $XX.X the million Now including compared $XX.X levels, of from return services Financial a operating slide currency were credit million reflecting of primarily earnings year, unfavorable portfolio. financial from the the XXXX. million the year-over-year reflects for pre-pandemic The XXXX of provisions services last foreign including up million, believe Revenue $X Financial losses. be growth growth provision. both more provisions increase of from to in a well portfolio $X.X as million to what

provisions million, the million in receivable losses first reference, last In million For quarters losses finance quarter $XX.X respectively. first the for as and the were year. million, XXXX, of and in XXXX $XX.X $X.X quarter compared to for $XX.X provisions were

finance stable. In and and trends addition, we portfolio credit gross worldwide X.X% performance the has extended or the receivable delinquency increased currently portfolio believe year-over-year, remain

financial As last of expenses first X.X% -- of X year. portfolio, XXXX in the average a percentage X.X% compared were the as services quarter to

In million the X.X% of on of the receivables quarter million continued big XXXX, finance the XX.X%. increase were during from ticket receivables strong originations franchisees a receivables. XXXX and reflecting increase first origination first In in contract quarters X.X% respectively. products demand quarters X.X%, of receivable and XXXX average sold $XX.X originations increased XX.X% XX.X% first finance originations and the finance XXXX, reflects in the for in yield a receivables $XXX.X quarter. of loan contract in of were on our XXXX Total the and The XX.X% by increase respective average yield and levels, or

slide XX. to Moving

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

losses trailing of quarter. at extended of the first relates the receivables, to it $XX.X X.XX% XX-month As represented of million credit finance end outstandings or net

XX is While year-end this ago, was a XX lower up basis basis than it points XXXX. points year from

tax reflects million payments. in Net $XXX.X the used from to included Cash year-over-year increase XX. million. first $XXX.X earnings investment, last activities working cash million expenditures of of receivables increases compensation additions finance Now lower $XX cash improved year. of of by million to XXXX of quarter operating net and $XX.X $XX.X net activities in lower quarter turning million slide investing and primarily the compared and capital The to provided by

financing million by $XX.X included stock of used dividends activities the $XXX.X $XX.X common cash cash of repurchase XXX,XXX of under repurchase share million and Net our for of million programs. shares existing

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

slide at compared from inventory Turning trailing at XX. XX X.X a other days sales demand, receivable On year-end year-end. accounts including to projects. growth and as Days year-end. XXXX Trade $XX.X from $XX increased of The basis, XXXX increased to outstanding days Inventories million to million well X.X XX XXXX critical new in as support industry inventory reflects products of higher turns to XXXX. primarily inventories XX-month compared year-end.

up our in-transit level better year-over-year and and our components chain costs situation, given with goods. supply the materials stocks dynamics availability finished are safety to of of Additionally, current parts the as raw assure associated

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

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

In under there outstanding. credit have under our available more flow than expected And to the commercial as operations, quarter-end, amounts and of facility, no there we and outstanding addition facilities. borrowings $XXX million paper are from no cash credit cash are

items outlook remarks that million. That will $XXX a now our capital concludes review for on We performance. anticipate first XXXX. my approximate quarter expenditures few I’ll briefly

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

back I’ll the Nick now to for turn his closing Nick? thoughts. call

that for detailed Aldo, review. financial Thanks,

depth across operating of groups. customized extraordinary Well, at the clearly Snap-on’s new enterprise. reach demonstrating another its first it the the complexity The resilient is vehicle of rising the full length of continuing breadth, turbulence of period was geographic high. advance. another wave vehicle and progress of registering gaining challenge difficulties Tools trend, market, RS&I, C&I, the the introductions, supply taking and the encouraging upward quarter positive the advantage quarter, our above amidst breadth, an troubled and across on each of performance, The repair times. all margin profitable hot in Group, our reaching riding model yet growth. of kits

record points XX.X%, depth. was down growth organic over RS&I, and XX XX.X% organic up also sales last quarter year. XXX XX.X% margin, C&I, the up P&L. OI from had The the OI a strong rising, margin Our strong to was and top and basis points. XX.X%, bottom,

The pops single catch And attention. spoke points. XX%, against X.X% And sales in added comparison. I directly of Tools’ up was unfavorable rise tally It’s final Remember clear all, basis XXX toolbox. representing pops, the mean, activity something of basis foreign more is organic of it of points it to organic XX% OI increasing a of up that we eye-catching Tools XX across over to corporation, margin. a EPS, it XXX strength All U.S., something that basis Group high advancing any big, the the really Stinger the points -- -- by the XX.X%, the neon currency. XX.X%, up even else in a pops $X.XX, distance like digits. brilliance the well, It sign, up uncertainty, OI margin,

by would. marked quarter is positive the performance is evolving length, It our the was year-over-year of trend. gain. finally, XXth we as consecutive world The extended And by thought operating it

make golden view We’ve forward, New quarter, and positioned most optimism the improving. And did growing and approaching the technologies. positive to it the equipment And more was that sought of continue. across being the our age, again of voice And -- believe it’s it quarter. period moving the vehicle software we confident momentum the we by needed The extending looking rising, that that and new confirmed first wages in the will and period, franchisees. the we’re we after we follow abundant in is technicians, opportunities, we’re momentum acceleration are and individual repair confident a sector. done collective a market model the change to like of

You do clear product, of path, difference a innovation, have and professionals. way device see, with our we connection critical the easing advantages for making customer in authored by

pride challenge bringing these people, the And advantage marking maintain in We quarter, continue an resilient rise dignity, Snap-on enable the And have have dedicated. into believe our we our second fully and in brand, professional, to and and markets will throughout team, other its the its the name. advantage our well an tested momentum and considerable beyond. like and and we advantages no XXXX serious

associates, turn are speak over the I of many to call the and I listening. before operator, Now team. our that you know to appropriate it’s I franchisees our

you. is why look who those of only would ask quarter need how This all but to encouraging, or

congratulations. For the have played considerable part you performance, my in you this

our given the team, hold you’ve the unfailing to future, Snap-on extraordinary admiration. thanks. you And you my have commitment for For you in have confidence my

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

Yes. Thank question And Glynn comes you. morning’s from this Christopher with Instructions] [Operator Oppenheimer. first

morning, the Thank curious, kind I about you. everybody. of showing Good some there. growth C&I up organic Nick, stepped was

You a talked chain bit. little supply the easing about

curious what in are of overall backlog if -- past breadth sounds due you’re it grow that assertive. to because So you stage? becoming And here like quite backlog is kind where continuing seeing diminish the and is

XX.X%, was industries. that the way, still pretty is bigger critical it the by mean, really -- in I increase strong. than Backlog the the

in before. supply it military period. has coming the lot better military that looks underway. it is victory complete the our there. So I’m quarter than the the what backlog still turbulence you borne seeing And backlog. the The Plus, the was getting declaring is over of you’re of in some but out this past. repair a back that challenges wasn’t Pretty much down not got

And Orders have still those strong isn’t we that’s factors backlog upwards, likes pretty have a two driving products. have to industries it just -- you So there. good. pretty and Everybody customized keep going. sitting critical

period process statement? Could the to you that of for improvement. continues you Snap-on undergird press specifics referred release, creation capacity in the And Okay. the value some considerable elaborate on the that mentioned and you

efficient Yes. selling is the vans. more one driving in of of the lot business in do we Tools Group be We on principal could the going better that components it reasons that. could the than a upwards off upwards, This our altered

they’re efficient could chockablock. because up be eyeballs. factories Our their They’re more to

expand to trying We’re them.

on expansion, into the working those we’re RCI the we’re pounding So expansions. and

help us bit. a -- will we So that quite better

So, you see that.

that’s innovation new because actual a the the RCI the And a repair focus It think I large of and so, to complexity RCI drive having ways, a Tools business, goes the in really And to up. that on products in necessitates connection number products. new customer and process of real business through. needs will lot Product applies and

see opportunities. a of we fundamentally, So lot

like business structurally have that, we opportunities have SKUs. because We sort of is XX,XXX sort of Our Chris.

integrated processes of vertically like of putting the pretty back a way to sometimes end all We’re have in look of cases, plating the different and of hands and in make the places, from factory user, tremendous number verticality. the forging to comes raw it in through a we the lot steel in jewels some

and a creates we horizontal, for That improvement. verticality. of have So, SKUs XX,XXX a lot interest continuous

So ability of better. lots our we to do confidence have in

more sneak been could that some for had I pretty there. one it the go it’s just soft to little in, want time, military resetting levels and into If like Great. a a deeper sharp sounds and

Just the curious color give could part on of lumpiness too. if -- military think story, some you I is

factor to that how curious here. aspect just So

were military really projects, we But they’re it a was huge mean, there. in in I negative not it now quarters seems to situation. projects. of back quarters. encouraging us, an for different a was they’re the not -- seeing projects, smaller spitting we’re the all think and It have over big blood come further I number

we’re this new we -- work. every new kind time actually spicket. military it town, is going they who procedures new in time this a tell have in, me of a administration an of as new the interpret of comes guys is, Every procedures, there’s -- opening regardless in it raise the to sheriff the don’t So a --

war the spicket and need say, And therefore, That’s eventually, what’s the happening tools, so opens. now. fighters I

question Bret Jefferies. the And comes next with Jordan from

that higher give sort the versus color some hand higher more in items. Could us product of within high versus then of called of out the you ticket you ticket some strength on storage think sort and the I ticket tools diagnostics mix? what

are growth tools -- hand Look, about with just period. the Sure. this

looking story So, lines, don’t see. there’s along really for the if you’re a mix, not we mix product

to it, at about of hand our particularly take, there’s look product, growth, lot you a give back, step our to tools, or equal they’re equal growth. you If

big got $XX,XXX. a the because big you monster, ZEUS+, introduced introduced I tool terms the it’s diagnostic. we top-of-the-line we in This being And handheld stronger of is and ticket, think Zeus diagnostics just -- than storage

with storage And so you originations selling that’s been quarter. tool in together that And this see robustly. the

a quarter, are ticket the of else with around selling because you’re than average. quarters cats tools the kind you floating bit So Zeus I seeing launch. see Everybody past franchisees -- -- this the other hand to And little think then of it. off in for pace more and the the quarter keeping is or big the dogs with a good selling more -- the diagnostics

Is I then -- and come I the base is to up? so. Or Okay. the yield business, underlying pass that... higher XX.X on those up yields a was on rates some the you can your mean, your question mean, of loans? bring or And rates think obviously, through I credit have potential your there

I but question. have want answer one Aldo question, least to at this needs to

So, I’ll let…

of And our not reason are customers in rates. They that Bret, probably of the is hold that serve. They’re rates lowest the the not. the the reflective for we we world. credit profile

on the play. segment our upward funds they years, have and decade, pressure kind we’re certainly And the our just long, for steady same don’t in are several where cost competitive been therefore, over recall. the probably you the have not So we as the of rates of decade, years. next we funded But

we as a steady. So, to tend of hold the that, program result

as to it’s slightly XX.X compared uptick but you customers little So the XX.X. so reflective is profile bit ago, probably a of see maybe the slight, very or now really a year better right to right, of

shipping one you it’s And labor, what’s down, input obviously but seeing -- whether Okay. last seeing cost Are are And the cost pricing metals cadence? then question the or you cadence the input has for side. how trending? on you come

similar, you cost So still materials. improvement. slight similar once at pockets Every is in buy look, while, looking spot of a resort the -- you’re and a to there’s to have

there’s new a the as when to challenge you I always said So, flexible. some There’s is broadly have earlier, door. but we you agile, most I’d think remain improvement, speaking, every day, that say the walk in

it. but to to improvement, your table modest So, manage the bring you resources got effectively still, to all

And comes Research. the with Barrington Gary next Prestopino from question

Aldo, a so question. I second have question for the

Oh, no.

for too. think, of and you positive other $X.XX looks about, million the you, effect What earnings. there was In that? $X.XX is category, tax $XX.X got like I of Well, Aldo, that, earnings, one exactly a I it’s

we’re if I looking income, don’t that… if know other at looking you’re at but

Yes.

Actually, believe it or not, higher we what a Gary, level than did much on the cash interest that we’re last we year. have on hand, of income earning

money. You nothing ago, you’re might remember, getting a your about on hardly year

Now does cash whatever X.XX% on effectively, corporation earning it about the have. is

right. All Okay.

And electronics -- want that I on software. shops Are growing. the question don’t that get the just to that. explains that there and finding So believe can’t are then this a more is I Nick, it any the it’s a possible adapting that and diagnostics you -- powerful not that diagnostic buy have are because upgrade the looking entities more the just models, are or rapidly and capabilities of that machine? of did on to

takes Well, are can it it the I I shops it diagnostics. have you And themselves. think do can by don’t yourself, there think mean, repair who -- more I way, but they sure, look, are there that mean, the time. guys

ZEUS+ software screens, a everything one and baffle But about the thing think reasons like is more. point And enhanced them, the are It’s it in an generally, been hit, why move more they truck this, good it from that of of software. And hardware diagnostics forward, what really has by the say they’re does more hardware. bigger so drive the can happens, that technicians more of wire, view, easier more in and the upgrading through make experienced the software. shops, advancements and need remarks, in some you’ll the upgrade you in it’s particularly such is got the the a both the see I get

coming the -- keep holding collision. much, is if a ideas the it’s wiring have for sometimes, we but like like find to it’s may That really bad trucks. Collision have view, not with they’re keep X, And to diagrams new because helpful keep and sound Mitchell to if puzzle like you up tried trying you to it’s because a emphasize that. in wire about booming. real We

of positive. that that, we and kind we’re kind think And I few in very they’re software see for the so do writing being trying to of, collision, one only of

there’s So opportunity through there. of a lot flow

the Most of shop. really it, though, depends it on

talking about in a cases, of they you’re or have a something. be get have the the for they’re you’re That’s diagnostics now, just you other or adding already. some them technicians -- most just If certainly repair shop, repair, shop more would upgrading cases, little ground starting That are In cases, fertile some don’t has truck diagnostic vehicle borrowing. using if at more collision that they’re are In it. look diagnostics. what to

then these or it comes And associated is package diagnostic that the higher that with with is Okay. software higher-ticket assume low-end products, you a as sell diagnostic. it versus ticket I also the would

it what, package. of the it know a for you do you the software a initial we buy tell the high you can view But yes, I time, like package, period I’ll is but how -- months we don’t software more afford the when Gary, do. for sell we get in we value, price to -- as six

the could take can and buy wait you for months level the which look or if you’re a or after six of title, will at purchase months be a months down six over till that be the talking like six But you subscription take would months discrete a next and take level you subscription software, wait a title. let’s about then then new next Zeus than so And start buy six a would and higher down. can

higher. it’s So,

And you diagnostic EVs? tool would that’s you a as do EVs more through a that specific just for car just situation lastly, foresee where the park proliferate develop

long handle on a dirt be a time that’s there a internal be because time. a sharing for unit off chewing a they’re that long same first, diagnostic to the going space to going because EVs happen the combustion yes, for time. would long is what -- and would highway They’re But Sure.

them you’re But to over hybrids so, tools. and the the EVs is both market, whatever in long in move competition. with you no some may them real of to get to a start deal diagnostic the them BMW situation, it’s But going as plug-in need a they so in that, the presence going software software what’s take happen. the start and technicians a thing to That’s deal Eventually, And that that or evolves in help way singularity will group car broad part. that once you here. MX have help your you process. including with There’s XXX-horsepower in

Bank comes Suzuki And question you. America. of with from the next Elizabeth Thank

I about ask financing arm. First, wanted to the

does those smaller have do of terms from mean, I take that you additional outlook, purchases. or In broadly to items tighten, if on your ticket some customers’ of and an as credit willingness for to see your debt your shifting large kind ability conditions ticket more of start originations, customers bigger these on risk impact

think a now. big in don’t robust of I People don’t items. a right ticket of know. question. big lot in That’s There’s hypotheticals a seem risk we I see there. be Actually, to terms the

now of there point I the pretty seems is And messages the were at two almost of seems One think pumped said we to economy. be to economies, conference, and the right the me. physical I physical our economy financial when the economy

we items with take-up expresses big-ticket and confidence. -- see we the so that that of And see their

or It actual hasn’t stay same. Really, view. because and been in rates the their the past It’s -- that psychology. technicians was of Difficulty] influences the been the The the choice. paraphrase money It’s -- it influenced is mental rates rates what that election. hasn’t our that [Technical downturns, a

great kept recession, we -- financial would hum. have going. glum the basically, shops And economies said And in was repair it so the they

but getting all up every bad news the for And on were getting breakfast so the day, they reading yes, and shows paper.

worried long the money. So, items, taking had about long-term were but payback they they

on away, change So, their bombardment money depending -- much I attitude, I don’t anticipate but the but they occurs. going could how

were money never exhilaration, and -- ticket the saw everybody more to big playing that’s what of can -- really, to coming between small of keeps they world psychological you and the And go now. mentality started small the not and mean, That’s It had it’s to But had recovery ticket. they go COVID garages out going. Repair they the that items, big customers essential. We big see ticket. out ticket. back see shift evidence out. think and on and started COVID but of stopped, the I the just they comfortable ticket focused how we is we when get I

that is Wall No, Main on different is it. Street. sense on certainly it here little Got than it Street the Yes. makes a sentiment

that. I Thank So get for All that. you right.

Scott from And with comes the ROTH MKM. Stember question next

the about volume out how I for talking car increased is bit. of ADAS little guess, increased just that with versus could a standpoint from, wanted flesh you collision or I for you’re level, a of collision the purchases on collision booming. Nick, at of How I the see diagnostics much just it demand to is just which collision guess side. equipment

It’s both of those.

collision in the I ADAS think is -- you’re and interested And that increasingly the forward X more and software and situation are we about more sort job more are in people the with talked of because collision we special about with in things like like neural as people seeing area network Mitchell also, more. go calibration sensors. setting the of where the focused talking

things are three -- happening, suppose. happening are I things Two

first in a of now. is a one The materials different car lot

so fiber you can’t cut carbon bend So and steel, like just have to different you on.

a -- a And have longstanding that’s was more taken then there’s need we then that that And do that time. of sell become are as the hardware ubiquitous, So, networks and thirdly, physical make and different lot a that. on lot That neural of the because collision that’s that. trend. software products more has to jobs focused more jobs recalibrate getting collision they

Those bumper, how takes think you taking your much it more you to replaced. how If see when time. hammer are costs that you it -- long get you, don’t it

for more work collision there’s jobs. So,

seeing addressing neural one, three, the So network; volume and the factors: two, and handling material; just three getting the productivity. they’re

And the the much Tools segment, in channel housekeeping they were Got pretty sell-through, line? it. sell van into versus in just

that’s is selling selling kind fluctuate bit anything but maybe down, and of much this up, They They they but -- pretty balanced and were van though pretty this quarter. significant. evenly from matching Maybe little have. a more into there, line, in we there’s bit, well little as not quarter quarter-to-quarter. go they’re a feel the pretty up They off But keeled. we’re

So, pretty [Technical solid. Difficulty]

question, last of sounds with Bret’s just it were new the about going out overall to Just or question Group. guess, tools there. composition the is in right. anything Can -- point to to were Tools about tools tactics? just All up Is the the, things? or different up out I trying selling maybe certain just It what’s of hand that line And it there, segment. bundling talk products you see back

fundamentally, mean, is ZEUS+, in ticket different I Tools Group time of things. A $XX,XXX. big the big the kahuna item, lot this

through that rolling business. that’s So

talked And people shelf. off showed the Stinger, kickoff I really that about It that’s and was [Technical at it thing your Difficulty] Neon gets technicians flying make it it. and attention. We a statement. and meant loved because to the I our want this so

products. nice some got has storage tool So

have a new that’s that. driving model and you So diagnostic

really some nice have tool in storage. You innovations

And which you some tools, are different things like number of in have new hand things, a of pliers.

hold couple pliers great handle kind of whipped job. because how We They have of guys you love to said, People and sell everybody started they new franchisees, I and any a these And that these loves. was can of three range grip. talking out I talking them. are to easy weeks the on positions, they’re like ago. in a so how pliers about really so well, functional,

together they before. impact where So impact you bundled weren’t that. like we’re some see putting Plus sockets, bundling things sockets some

like trucks, of and things really very lot you difficult people sockets for you are So a hard -- power. impact need use

have and sockets the to of those hard a kinds So but wall less different be stronger, of things. dimension, thicker

see we focused on coming So, truck out, the those maybe shop.

a it’s the products. But the around way. are kinds that There’s are situation. always driving those story things that of So always

question from Our MacGregor David next comes Longbow Research. with

off me percentage in and from shift owners seeing the asking garage the Are overall. you by about independent Let dealerships? just a mix start of versus revenues technicians revenue

could I say really. Not you this. mean,

Let sure. group. way, Tools Group me in the it in Tools for I not the in say this this. Only see don’t

the they argue tend to garage you number are get owners You that, who right, ZEUS+. are probably a could of all one also technicians, buyer

of seeing every unit, that see the in of might So you roll way, more that. you’re diagnostic line out the time you top that. But

that Tools any see don’t change Group. I expectations in our for adjusting in So way, the

pretty repair equally models the repairs If to the the new and RS&I, diagnostic two shops were equipment. But much was you split sales and -- independent. independent big pounders following go -- between is businesses garages between software in up, and OEM while equipment to RS&I the

generally, So a OEM garages on RS&I you’ll toward side. the see shading slight

see much by. the strong big won’t mix always -- any -- a You seems shop That’s for that ZEUS+ except has than on of to sells, fact the change the side don’t always tools it. much that, any see kahuna changes. a pretty we Other

Nick. the a for staying Just on owners garage minute,

X.X%. up is receivable contract Your

You garage sense maybe little as starting that alternative? face Snap-on difficulty returning a credit securing to an are credit, more to owners

For the inventory. -- the franchisees van and are the receivables leases with and contract

that’s… So,

Yes.

So, any secure let’s there is say, well as in a throw credit? of them challenge facing group on this just more and

it’s extension hearing of David, maybe. But not I’m it. credit don’t a logical -- higher I know.

impression would just the offer, robust. And our mean, our my sheets windshield I in pretty guy, are are is hear surveys, it based I windshield on You’re nobody a too. I balance and saying is that. how was say technicians are franchisees they the don’t how

that’s So I occurring seeing it think think we’re now. yes, that might I right now. don’t happen, don’t but happen

is a I think sector. robust pretty this

they see [Technical were plush. were get didn’t during We haven’t but it -- we still manipulated pretty the great more they cautious, Difficulty]

happen, I don’t So don’t I Could anyway. but hear know. it

on backlogs. storage And backlogs far Can you’ve of the how of you other and and... back give any that. some those categories for are us sense where then just maybe Thanks got extending Okay. large just

don’t go they -- box -- you back. factories. want I so far. tool really every can franchisees. you I into Too grains, but know, storage is get don’t guys Backlogs I that many telling take around get. spending Look, That’s they to why if wish, these me we’re was these can are at sell this that.

you wonder tell Sorry. But looking probably long. we longer makes backlog it sometimes -- than a But wonder if like. would pretty know. better want don’t key the more. I’d people It I substantial, is at what, them we is it’s sometimes just we --

Because mean? it I what everybody a box, seems. Snap-on know wants You

storage long attractive, down. we just like why more. So is wait trying we’d because all up one the to you to to factories the our the maybe makes say, But lines if I out are eyeballs need go, really. a are more. this categories for that more. turn car we Virtually of factories. people our have a for like product I That’s bring everywhere tool backlog all chases it in more and most need I to But need the enhancing it time.

something at a the as storage? reason regional kickoffs It Nick, were that there why Is seems discounting then, you’d odd discount on offering packages you backlog. be

Because time. the part discount packages That’s buy the offer reason of we all now. to

could you say, okay, to -- You of in have But don’t are reality deal. in the a sell package. David, discount kind reality, franchisees have conditioned our off to

product. attractive Our how to art we but is or depending make want richer to deal that leaner move on the

guess, aren’t I or confidence question sales you guess, strength big-ticket combined you given Wall power Got pulling Nick, there. out at some Street, with whether point road? purchasing that adversely there’s the future technician it. in gives sales, down forward me I slowing Street macro -- you’re for Main on impacts growth Last is just, hand and tools what the a

I about been much years. XX been I tools hand or hell so I have don’t. mean I hand mean, worry tools. don’t here I I think water. -- high I only Actually, come mean strong

psychological that’s the -- which powder was and keep right later, people the But the talking items, reservoirs you’re big not companies. dry want like tremendous breaks psychology seems and guys working tools a in But the enough. for day all work. in that’s now maybe it the long to there’s about than a thing sooner of though It’s my say, it of money, the the think to talking I sometimes. through who I optimism balance, different I they are of sometimes, every if pulling is or while, longer payback So even hand Liz,

you their The all of higher. at at manufacturers never small large in them guys look their look manufacturers, Manufacturers been of divide you a optimism, versus sudden terms big of the outlook. a there’s small If almost between Association National and have

So, I part is what this of think is. it

lot I of talk. think a there’s

or not even of we who saw anything wrong -- know I franchisees, guy, and talk walk I’m in As I they’re you when when say, this a this saying, like walk meet he that. or it’s saying Paul? who’s guy? is. a Is garage just -- you the But lot in don’t there’s

Well, it was a good quarter. Congratulations, Nick.

And the last Luke from question Junk with Baird. comes

so might I’m question both a now ask Group just And for with really understand this the was gains on in think one in saw I’ll I hoping a how know we’re quarter material just we we and and today. Thanks much Especially be to Tools you to sustainable more. understand here. for what’s what little I here. opportunity unpack C&I time, gross in Aldo, getting little is, Nick go Thanks. as or normalization bit terms limited margin costs whether in that’s more the we’re and from hoping of right even you margin could me maybe what price seeing there or the going

do Well, -- to this. I look, like

Critical simple. in like industries are that are about did it’s and this. the highest we talked margin military margins tends Look, that’s pretty Critical And military that they is do tends if the And well. and business to be that industries, we’re I’ll robust type boomshakalaka!. in by you to be So don’t heard I C&I area. the good. the product know -- it. but call, getting And base base of pretty the moving

-- I factor And that’s pretty that were XX%. drove there. bunch There buy They were another think, That’s want is that’s up thing one think whole principally, other and were you mean some because the greater the strong. to supply critical I So generally, you industries a what but spot I you’re the stuff things. getting seeing have you on [ph] up of than don’t buy, you go them. stuff lot have better, a -- is when not buy to out the chain of margins

some through. working its of So that stuff way is

So very mix. it’s a complex

The had sold -- continue. some situation. and We That the industries to great points we are basis we do for factor broke did seeing well. and big there, bottlenecks, us customized well some that they XXX are abatement. doing the of should critical the with mostly, But in kits

C&I. that’s So

there Tools you vertically it But buy commodities, commodities, a is so were, it which If Group, I think wasn’t of there’s look no Tools situations. were very is -- that if they the at there lot the attenuation it’s that. story that an product wondering; guys mix is in Group so fact the integrated, commodities in

pop that. So they get a from nice

And so, they’re that improvement some situation. in getting

And they’re hammering their Tools concert the foot course, away then that. in with off Of been the pricing Group RCI. has at taking

situation. that a you lot So, see in of happening this

the think we thing So, sustainable. whole is

going Now we the you be can’t necessarily from to the margin room telling Group the they to situation. up they we next a and that is think the -- but but RCI for higher. believe move -- go not same next could there’s we Not I’m OI rationalization that quarter, Tools of quarter, think don’t

Thank session. you. concludes I comments. to Verbsky the question-and-answer for like to closing This Sara any would return floor the

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

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

disconnect The presentation. now today’s you attending may conference you concluded. has Thank for lines. now you. And your Thank