Q1 2021 Snap-On Inc Earnings Call
Okay.
[music].
Good day and welcome to the snap on incorporated first quarter 'twenty 'twenty. One results Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Sara <unk> Vice President Investor Relations. Please go ahead.
Your neck and good morning, everyone. Thank you for joining us today to review snap ons first quarter results, which are detailed in our press release issued earlier. This morning, we have on the call today, Nick Pinchuk Snap ons, Chief Executive Officer, and Aldo, probably Ari snap ons Chief Financial Officer.
Jack will kick off our call. This morning with his perspective on our performance. Although will then provide a more detailed review of our financial results. After Nick provides some closing thoughts we'll take your questions.
As usual we've provided slides to supplement our discussion these slides can be accessed under the downloads tab and the webcast viewer as well as on our website snap on dot com under the investors section. These slides will be archived on our website along with a transcript of today's call any statements made during this call relative to management's expectations.
Estimates or beliefs, or otherwise state management's or the company's outlook plans or projections are forward looking statements and actual results may differ materially from those made and such statements additional information and the factors that could cause our results to differ materially from those and the forward looking statements are contained in our SEC filings.
Finally, this presentation includes non-GAAP measures of financial performance, which are not meant to be considered and isolation or as a substitute for their GAAP counterparts, and additional information, including a reconciliation of non-GAAP measures is included in our earnings release and in our conference call slides on pages 14 through 16.
It can be found on our website with that said I'd now like to turn the call over to Nick Pinchuk Nick.
Thanks Sara.
Good morning, everybody.
As usual I will start the call by covering the highlights of our first quarter and along the way I'll give you my perspective.
And our results they are encouraging.
And our markets, they're standing firm and on our progress it's made us stronger than ever before and will also speak about what it all means.
We believe it means we're getting better and better positioned for more even while we're still in the midst of a once in 100 year opinion pandemic and.
And after all that Aldo will move into a more detailed review of the financials.
We believe our first quarter is clear confirmation of snap ons ability to continue its trajectory of positive results further accommodating to the virus environment overcoming period to period variations from business to business dealing with macroeconomic headwinds and advancing along our runways for both growth.
And improvement.
Our reported sales and a quarter of a 1.024 billion and 600000.
And we're up 22% and COVID-19 point to me and a favorable foreign exchange and a $11 3 million of acquisition related sales organic sales growth was 16, 3% gains and every group.
It's our third straight straight quarter being above our pre pandemic levels.
And ongoing contributions from our snap on value creation processes. The principles. We use every day safety quality customer connection innovation and rapid continuous improvement or RCI. They all combined to drive that progress.
Progress was.
I'm cooperating.
Income up 200, and 200.9 million was up $62 million from last year, which included $7 5 million of restructuring charges.
Operating margin was 19, 6% up from the 2020 level of $16 three per cent or $17 two per se as adjusted for restructuring.
For financial services operating and operating income of $65 3 million increased 14, 8% and the delinquencies were down.
Even in the midst of a pandemic stress test during and commercial trial and what we would call extraordinary proportion.
And that result, combined with Opco for a consolidated operating margin of 23, 9%, a 300 basis point improvement as reported and up 2200 20 basis points as adjusted.
First quarter EPS was $3 50.
Up 46 per cent from last year's 240, <unk> and excluding the 2020 restructuring charges EPS grew 34, 6%.
I've said, it before and I'll say it again.
We believe snap on a stronger now than when we entered the great weather, Inc. And we also believe that our first quarter results testify to just that especially when we compare them to 2019 before the virus.
Let's do that.
Versus 2019, our sales and our past quarter grew a $102 9 million or 11, 2% and that reflects $15 3 million of acquisition related sales of $11 6 million of favorable foreign currency and a $76 million or eight 1% economic gain the 2021.
And I'll go operating margin of 19, 6% was up 50 basis points from from 2000 to 2019 level as adjusted for a legal settlement and that earlier period, and that's 50 point gain.
[noise] was achieved against 80 points of unfavorable currency and acquisition impact all while still absorbing the COVID-19.
And that's where our markets.
Auto repair and remains a quite resilient and the technicians are rolling they know they've weathered the depth of the COVID-19 shock and have learned to accommodate the virus environment and are moving to psychological recovery there.
And there's still some Arab vigilance book.
And activities are robust and they know they won't be shocked again by a spike there quite they are quite positive regarding the and the future of driving as people pivot from a shared mobility of individual transportation and it's it's it's vehicle repair with the technician and sets a strong and resilient market.
You can hear it you can hear it and our franchisees voices and you could see it written and clearly across our double digit numbers.
Also on auto repair there our shop owners and managers there are signs that the auto business is rising demand from new and used cars and high but dealership repair and maintenance and warranty is still a tiny weighted so there's a there is a gradual gain and we're positioned to take advantage with a broader stronger broader and a stronger product line within <unk>.
Patients like our Triton D 10, diagnostics and new acquisitions like dealer FX, putting us deeper into dealerships than ever before and providing us providing us a clearer view of the future repair trends and new technologies and evolving vehicle platforms.
Dealer FX puts us at the right place at the right time as things change.
Finally, let's talk about critical industries, where snap on rules out of the garage solving task of consequence is where C&I operates.
The most international of our operations.
And these other customers that have been most impacted by the virus they are slower to accommodate and to recover but they havent been recovering and in the quarter. The results showed that trend. Despite some significant headwinds, including the continuing impact of the virus. The February freeze and Texas, some challenged business sectors like oil and gas and troubled geographies like.
Southeast Asia.
Despite that variation, we did see growth and critical industries, and proven and a number of areas and aviation and education and heavy duty fleet. They all combined to overcome the continuing turbulence and natural resources.
Also in C&I, SNA Europe and so.
And in Europe.
Another quarter of double digit growth with broad strength across the geography, So places like France, Spain, Italy, Germany, Germany, and the Nordic region and from our Asia Pacific Division up double digits as well with solid increases in key countries, like China, and India and Japan.
So overall I'd describe our C&I markets is improving and representing a clear opportunity and coupled with our auto repair related businesses. We believe theres clear overall progress along our runways for growth enhancing the van network, expanding repair shop owners and managers extending to critical industries and building and emerging.
Markets leveraging our broadening product line, we only are strengthening brand and deploying the increasing understanding of the work.
And understanding of the work that is the hallmark of snap on people even in the throes of the pandemic shock.
About a year ago.
As we entered the virus.
We recognize the resilience of our markets and the strength of our model projecting a V recovery.
And that's how it played out.
You can see it and the results.
So now, let's turn to the segments and discuss those results and and the C&I group.
On a reported basis, including nine point to me and a favorable foreign currency translation and $7 3 million of acquisition related sales first quarter volume rose.
<unk> <unk> three per cent compared to last year organic sales were up 9.5 per cent double digit growth and our European a handful business and a mid single digit rise and critical industries and led the way.
From an earnings perspective, C&I operating income of $50 7 million and clean one 4 million of unfavorable currency represents a rise of $19 2 million compared to the $31 5 million registered in 2020, which included $4 4 million of restructuring that all means.
And on an adjusted basis and adjusted increase of over 40 per cent and as adjusted increase of over 40 per cent and the operating margin was $14 seven per cent.
And as reported increase of 420 basis points and 290 <unk> as adjusted.
And then when compared with 2019, the pandemic free measuring stick sales were up seven 2% and that includes $10 million of 433, 1% organic gains of 8 million of acquisitions and five point to me and from favorable foreign currency. Once again C&I demonstrated sequential improvement and you go back and look at their numbers they keep getting.
From a closer and now they are above pre pandemic levels.
Despite the ongoing uncertainty it's one of the things I think we want and remember the the virus doesn't go on and we're still bearing and and we didn't have it in the 2019 and C&I is above that level as part of the trend we remain committed to extending in critical and critical industries. That's the CNI sweet spot. So we will keep strengthening our position to win.
To capture those opportunities as they arise and enabling that at time, Inc.
And as our expanding and lineup of innovative new products developed especially to make critical work easier. One example is our Cte 90 10, three agents drive E. T bolt brushless impact wrench, the newest member ever and Monster lithium family aimed at tight spaces sustained power rugged durability and precise control. The 90 10 features three of <unk>.
Pound feet of bolt break and weight towards and 240 pound feet and working towards all the power of technician needs, when they're working and and confirmed quarters.
It offers a variable speed trigger and three speed selections and forward and reverse that means greater control adaptable to any application and no over talking important and 90 10 advanced design also reduces motor temperature rise to bill and delivering a higher durability and a great power to weight ratio.
Spirited and its fitted with the Hunter and loom and headlight that helps technician work and technicians work and dark environment, just what's needed for those close jobs and.
And the 18th 18 volt battery with a five amp hours ensures a consistent output and extended extended run time, which translates to to less charging and more efficient work day and all of this comes and this is the best part I think all of this comes in and extremely compact size only <unk>.
And three quarter inches and overall length, it'll fit into the tightest of workspace.
C. G 90, 10 is a great tool, it's had strong demand and it's already one of our 1 million dollar hit products.
Don't want to leave C&I.
And without mentioning SNA Europe.
Double digit sales growth again.
And <unk> by the blackout.
Two a management system expanding product customization to the needs of the task driving progress across against the twin headwinds of a difficult Covid environment. You know Europe is not so easy these days and the uncertainty of Brexit no small feat.
Well, that's C&I, continuing sequential improvement and positioned for more.
Now onto the tools Group Inc.
Sales of $478 3 million up $102 4 million, including $6 7 million of favorable currency, and and $95 7 million or 25% organic gain double digit growth both in the U S and the international operations the operating margin.
With 27%, yes, 27% up 780 basis points compared with pre virus do not 2019.
Tools group sales grew $68 1 million 16, 6%, including $5 2 million and favorable currency translation and $62 9 million or 15 for a $15 one per se organic gain.
And this year's 27 operating margin was up 430 basis points compared with pre pandemic 2019.
The tools group is responding to the challenges of the day, increasing its product and advantaged fortifying its brands and and further enabling its franchisees.
And the results show and Huh.
We do believe our runway for a runway for coherent growth enhancing the franchise Gratulation network represents a continuing opportunity and there's evidence that we're realizing some of that potential across the van channel and our in our franchisee metrics the financial and physical indicators that we monitor closely again this quarter they remain clearly favorable.
Paul.
And based on those metrics.
We believe the franchisees.
I have never been stronger and.
And they say so and our direct interactions that are at events like this past January as a kickoff meeting held this year and assistant it was and it was a great a fair well attended strong orders visible commitment to our brand watch parties all over the country I zoomed into several myself and they were brimming with enthusiasm and optimism our franchisees.
Entrepreneurs and professionals, all are pumped competent and reaching higher.
The tools group quarter are you at all and.
That's a strong a strong advantage for us.
Scott quarter was also marked with snap on value creation customer connection and innovation offering new products sometimes.
Just an improvement on and establish line, but clearly making work easier solving problems delivering productivity gains.
All of these are born out of observing the changing work and shops on an everyday basis, where and those shops every day. We watch the worked we offer the products one such AD is a is our K E R and 681 and seven seven.
Seven and four single Bank Epic series roll cab and figure it entirely with extra wide 62 inch, Georgia, greater flexibility and capacity and our standard footprint, making the most up and limited shop space, our franchisees or are already calling and uninterrupted storage. It's the first large capacity roll pay up with a full complement of extra work.
Jack Drawers and the industry, it's made in Arizona, Idaho plant I saw some of them being made there just last month and the local team is proud of them. It comes with two swivel and to Richard Casters located right on the corners of the box it doesn't seem like much of the of a change, but that's a clever innovation that provides mobility and tight spaces. While also.
Greatly enhancing box stability, that's a very important feature from a high capacity unit. The T. R 681 epic strength.
<unk> and styling 8000 pounds of low capacity and more than 45000 cubic inches of storage space. The franchisees are saying, it's it's been a clear here.
And they're right.
We spent some time.
There were several.
Quarters.
Working to expand and franchisees selling capacity harnessing social media, improving product training and RCI and Dan operation and so that's paid off selling capacity is up and you can see clearly and the three straight gangbusters quarters for our tools group.
I don't need to say anymore about that.
Now, let's speak about ours, and I first quarter organic sales rose seven 6% with the with varying gains across the board under car equipment coming back delivering double digit rise diagnostics and information products and independent repair shops.
Growing at a mid single digits and and the business are focused on OEM dealerships.
Advancing low single digits operating earnings of $81 4 million, including $1 5 million and unfavorable foreign currency effects increased $4 1 million up from 2000, and 'twenty, which included $3 1 million and restructuring costs compared with 2019 sales grew $19 7 million or 6%, including a 10 million or $3.
1% organic gains of $7 3 million from acquisitions, and $2 3 million of unfavorable foreign currency, we clearly see the potential and our runways for growth and the arts and I group, expanding our snap ons presence and the garage with coherent acquisitions and a growing line of price.
A powerful products.
Orange and is organic growth and our quarter was was broad based but the double digit rise and under car equipment was was especially welcome turn and was led by innovative products like our newly introduced true point E. D. S calibration system.
Advanced driver <expletive>istance systems, or a D. A S R active and p<expletive>ive age to keep vehicle p<expletive>engers safe and things like collision avoidance Lane departure warnings automated automatic parking and Crosswinds stabilization system features a great board.
What what's really music to our ears is that they require periodic calibrations to make sure they're working with precision and calibrations can be complicated sensors and cameras vary considerably across vehicle makes and models and if you get a faulty recalibration it leads to rework and it's not good for safety.
And our new our new John and being a 2.8 years calibration systems. This is a fixed and making sure. The vehicle is physically aligned correctly guiding calibration of the sensors and documenting that the procedure was performed formed and appropriately it does so and it and it does so for all the multitude of makes and models thing regularly and OEM.
And aftermarket shops, the new two point is easy to use it.
And it requires minimal training and.
Compensates for the floor irregularities that are so common and garages and and the Devils alignment and calibration is quick and efficient and as the OEM compliance, it's a powerful product right and the crosshairs of automated vehicle technology. That's so prominent today.
Progress and diagnostics and information with independent repair shop owners and managers and was also a clearly evident and our diagnostics business.
And our ours and I activity and in this quarter the launch of the new Triton.
Right and D 10, and handheld helped other bosses that positive and.
Triton is ultra fast a two second move up and it has a best in cl<expletive> 10 inch touch screen, it's geared to the more capable technician and offering a one touch full diagnostic CT scan scope and capabilities for performance display and guided testing of suspect components that you may want to replace.
But you want to make sure those other problem.
It's loaded with our fast track intelligence diagnostic rooted in our proprietary database of over 200 billion vehicle event of snap on only feature that enables quick and accurate diagnosis of even the most difficult and unusual repairs, ensuring an efficient and effective solution for those very very time consuming problems.
Just what the capable and senior technician needs.
And as I've said, we've spent now I've said before we've spent considerable effort working to help franchisees sell and sell the complex tools from up today and efficiently and it is paying off with Triton and each of our franchisees received the demonstration unit.
Facilitating the hands on training guided by the video presentations that were a prominent part of our of our network's February sales meetings. Following that initial instructions and demo unit could then be put immediately and the hands of a technician to physically showcase the great benefits of our powerful new tool and it worked.
The launch has been a success our franchisees are comfortable selling new and complex tool and many are now calling the.
Try and B tend to burst diagnostic unit ever.
Finally, our son and I got a nice boost and a quarter.
As often is the case by the new tech by New technologies, and OEM dealerships helped by some significant essential tools and equipment programs supporting the new electric vehicle launches.
Okay.
And we're quite positive.
Our S and is future repair shop owners and managers as the vehicle industry evolves.
It plays to our strengths.
So that's the highlights of the quarter continued and strong progress.
And third straight period exceeding pre pandemic levels C&I sequential improvement.
Sequential advancement Arts and I saw it the tools group strong and pump organic sales rising $16 three per cent optical operating margin $19 six per cent E. P. S $3.50, a big rise and most important.
Most important.
More testimony that snap on has emerged from the turbulence much stronger than when we entered.
It was an encouraging quarter.
Now I'll turn the call over to Algo Aldo.
Our consolidated operating results are summarized on slide six the first quarter of 2021 exhibited robust financial performance, particularly as compared to last year. When we experienced the initial shock from the virus. The quarter's results also compared favorably with the first quarter of 2019, which being a pre pandemic time group may serve to be the more meaningful base.
Volume.
Net sales of 1 billion and $24 $6 million and the quarter increased 22 per cent from 2020 levels, reflecting a 16, 3% organic sales gains and 11 $3 million of acquisition related sales and $19 $2 million of favorable foreign currency translation.
Additionally, net sales in the period increased 11, 2% from $921 $7 million and the first quarter of 2019, including an eight 1% organic gain $15 $3 million of acquisition related sales and $11 $6 million of favorable foreign currency translation.
Consolidated gross margin of 51 per cent compared to 49, 5% last year, which included 60 basis points from restructuring costs. The gross margin contributions from the higher sales volumes and benefit from the company's RCI initiatives were offset by 40 basis points of unfavorable foreign currency effects.
Operating expenses as a percentage of net sales and 35% group 270 basis points from 33, 2% last year, which included 30 basis points from restructuring costs.
The improvement primarily reflects the impact of higher sales and cost containment actions, partially offset by higher stock based cost at 30 basis points of operating expenses related to acquisitions opt.
Operating earnings before financial services of $249 million compared to $138 $9 million, and 2020, reflecting a 44, 6% year over year improvement.
As a percentage of net sales operating margin before financial services of 19, 6% improved 330 basis points from 16, 3% last year, which included 90 basis points for restructuring costs.
Financial services revenues of $88 $6 million from the first quarter of 2021 compared to $85 $9 million last year.
Operating earnings of $65 $3 million increased $8 $4 million from 2020 levels, principally due to the higher revenue as well as lower provisions for credit losses.
Last year's provisions included a $2 $6 million charge for higher reserves, resulting from the economic uncertainty caused by COVID-19.
Consolidated operating earnings of $266 $2 million increased 36% from $195 $8 million last year.
As a percentage of revenues the operating earnings margin of 23, 9% compared to 29% in 2020, which included 80 basis points from restructuring costs, excluding the restructuring and cost operating earnings margin in 2020, one increased 220 basis points from last year.
Our first quarter effective income tax rate of $23 five per cent compared to 24, 2% last year, which included a 10 basis point increase related to the prior year quarter's restructuring charges.
Finally, net earnings of $192 $6 million or $3.50 per diluted share increased $55 $4 million per $1.01 per share from 2020 levels, representing a 46 per cent increase and diluted earnings per share and.
Additionally, net earnings increased $14 $7 million 34 per share from 2019 levels, representing a 10, 8% increase and diluted earnings per share.
Net earnings and 2020 included restructuring charges of $6 million after tax or 11 cents per diluted share and net earnings in 2019 included a benefit of $8 $7 million after tax or 15 cents per diluted share from a legal settlement.
Excluding these items diluted earnings per share of $3 50 in 2020, one increased 34, 6% from 2020 and 16, 3% from 2019 levels now, let's turn to our segment results.
Starting with the C&I group on slide seven.
Sales of $345 $7 million increased 15, three per cent from $299.9 billion last year, reflecting a nine 5% organic sales gains and $7 $3 million from acquisition related sales and $9 2 million of favorable foreign currency translation.
The organic gain includes double digit increases and the segment's European based hand tools business and Asia Pacific operations as well as a mid single digit gain and sales to customers and critical industries.
And improvements in year over year sales growth were widely seen across Europe as well as in most emerging markets.
Additionally, within critical industries strong sales gains were achieved and aviation heavy duty and technical education, well year over year declines and the natural resources sector improved from those experienced from the fourth quarter of 2020, but continue to like pre pandemic sales levels.
As a further comparison net sales in the period increased seven 2% from 2019 levels, representing a three 1% organic sales gain $8 million of acquisition related sales and $5 $2 million of favorable foreign currency translation.
Gross margin of $38 seven per cent improved 190 basis points from 36 eight per cent and the first quarter of 2020, which included a 150 basis points from restructuring charges.
Aside from the improvements, resulting from the lower restructuring costs and contributions from higher sales volumes were partially offset by 70 basis points of unfavorable foreign currency effects operating expenses as a percentage of sales of 24 per cent improved 230 basis points as compared to last year, primarily as a result of the higher volume.
And savings from cost containment actions.
Operating earnings for the C&I segment of $57 million, including $1 $4 million of unfavorable foreign currency effects compared to $31 $5 million last year, the operating margin of $14 seven per cent compared to 10 five per cent a year ago.
Turning now to slide eight.
Sales and the snap on tools group of $478 $3 million increased 27, 2% from $375 $9 million, and 2020, reflecting a 25% organic sales gain and $6 $7 million of favorable foreign currency translation.
Organic sales increase reflects double digit gains and both our U S and international operations.
Net sales and the period increased 16, 6%.
From $410 $2 million and the first quarter of 2019, reflecting a 15, 1% organic sales gain and $5 $2 million of favorable foreign currency translation.
Gross margin of 45, 9% and the quarter improved 320 basis points from last year, primarily due to the higher sales volumes and benefits from RCI initiatives.
Operating expenses as a percentage of sales of 25, 2% improved from 29, 8% last year, primarily due to the higher sales volume and savings from cost containment actions.
Operating earnings for the snap on tools group of $98 $9 million compared to $48.6 million last year. The operating margin of 27 per cent compared to $12 90 per cent a year ago and increase of 780 basis points.
Turning to the Arts and I group shown on slide nine.
Sales of $347 $6 million compared to $314 $6 million, a year ago, reflecting a seven 6% organic sales gain $4 million of acquisition related sales and $4 $8 million of favorable foreign currency translation.
The organic increase includes a double digit gain and sales of under car equipment.
Mid single digit increase and sales of diagnostic and repair information products to independent repair shop owners and managers and a low single digit gain and activity with OEM dealerships.
As compared to 2019 levels net sales increased 6%, reflecting a $3 one per cent for organic sales gain $7 $3 million of acquisition related sales and $2 $3 million of favorable foreign currency translation.
Gross margin of 46 per cent decline from 47, 9% last year, primarily due to the impact of higher sales and lower gross margin businesses and 70 basis points of unfavorable foreign currency effects.
As a reminder, under car equipment as well as the <unk> program related activity, both of which had healthy sales increases and the quarter typically have a gross margin rate that is below the Rs and ice segment's average.
Operating expenses as a percentage of sales and 22, 6% improved 70 basis points from 23, 3% last year, which included 80 basis points of restructuring costs.
Excluding the effects of restructuring benefits from the higher sales volumes were more than offset by 80 basis points of operating expenses related to acquisitions.
Operating earnings for the Arts, and I group of $81 $4 million compared to $77 $3 million last year, the operating margin of $23 four per cent compared to 24, 6% and a year ago.
Turning to slide 10.
Revenue from financial services of $88 $6 million compared to $85 $9 million last year.
Financial services operating earnings of $65 $3 million compared to $56 $9 million and 2020.
Financial services expenses of $23 $3 million decreased to $5 $7 million from 2020 levels, primarily due to lower provisions for credit losses, resulting from $2 $4 million of lower year over year net loan charge offs and the absence of the previously mentioned first.
Quarter, $2022 6 million dollar truck.
As a percentage of the average portfolio financial services expenses were $1 one per cent, one 4% and the first quarters of 2021 and 2020, respectively and.
And the first quarter the average yield on finance receivables of 17, 6% and 2021 compared to 17, 7% and 2020.
The respective average yield on contract receivables was $8 four per cent and 9.0 per se, but.
Our yield on contract receivables in 2020. One includes the impact of lower interest and business operations support loads for our franchisees. These laws were offered during the second quarter of 2020 to help a comedy franchisee operations and dealing with the COVID-19 environment.
As of the end of the first quarter approximately $11 million of these business operating support loans remain stable.
Total loan originations of $261 $8 million and the first quarter increased $6 $2 million or two 4% from 2020 levels, reflecting a one 7% increase and originations and finance receivables, while originations of contract receivables were up five 7%.
Moving to slide 11.
Our quarter and balance sheet includes approximately $2 $2 billion of gross financing receivables, including $1 9 billion from our U S operation.
Our worldwide gross financial services portfolio decreased $25 $8 million and the first quarter, primarily due to an increase and net collections.
The 60 day, plus delinquency rate of one 6% from the United States extended credit is down 10 basis points from the first quarter last year and down 20 basis points as compared to the fourth quarter of 2020.
We believe this reflects the typical seasonal delinquency pattern that customarily results and the decline and the first quarter followed by increases later in the year, usually peaking in the fourth quarter, where we compete with the technicians holiday related discretionary spending.
And as it relates to extended credit or finance receivables trailing 12 month net losses of $43 $9 million represented 255% of Outstandings at quarter and Dow.
And seven basis points sequentially, and down 44 basis points as compared to the same period last year.
Now turning to slide 12.
Cash provided by operating activities of free and a $19 $3 million and the quarter increased to $105 9 million from comparable 2020 levels, primarily reflecting the higher net earnings and net changes in operating <expletive>ets and liabilities, including a $32 $1 million decrease in inventories.
Net cash used by investing activities of $207 $2 million, including $200 million for the acquisition of dealer FX and capital expenditures and $19 $3 million.
Partially offset by net collections of finance receivables of $12 1 million free.
Free cash flow during the quarter of $312 $1 million was 158% in relation to net earnings.
Net cash used by financing activities of $131 million included cash dividends of $66 7 million and the repurchase of 722000 shares of common stock for $151 $9 million under our existing share repurchase programs, partially offset by proceeds from stock purchase and.
<unk> plant from $93 million.
That's a quarter and we had remaining availability to repurchase up to an additional $268 $7 million of common stock under existing authorizations.
Turning to slide 13.
Trade and other accounts receivable increased $10 $1 million from 2020 you're right.
Day sales outstanding of 62 days compared to 64 days of 2020, you're right inventories.
Decreased $16 $4 million from 'twenty, and 'twenty here and on a trailing 12 month basis inventories turns of two six compared to $2 four at year end 2020.
Our quarter and cash position of $904 $6 million compared to $923 $4 million a year and 2020.
Our net debt to capital ratio of $12 four per cent compared to $12 one per cent that year end 2020.
And this is the cash and expected cash flow from operations, we have more than $800 million and available credit facilities as of.
Quarter, and there were no amounts outstanding under the credit facility and there were no commercial paper borrowings outstanding.
That concludes my remarks on our first quarter performance and I'll briefly review a few outlook items for 2020 one.
We anticipate that capital expenditures will be and the range of 90 million and $100 million weaker.
We currently anticipate that absence of any changes to U S tax legislation and our full year 2021 effective income tax rate will be and the range of 23 to <unk> 44 per cent.
I'll now turn the call back to Nick for his closing thoughts Nick Thanks Aldo.
That's our first quarter, another encouraging period resilient markets through the shock and on the way the psychological recovery the third straight quarter of upward trajectory clear year over year achievement and the third straight quarter of results exceeding the pre pandemic levels of 2019 arsenide sales continuing upward.
And with Oi margins of 23, 4% attenuated, but still strong C&I ongoing sequential growth across the world and O Y and margins 14, 7% up nicely even from 2019.
And then the tools group sales up organically, 25% versus 2020 up and all product lines and all geographies volume up 15, 1% versus 2019, and an Oi margin of 27% finally financial services in the midst of and.
The greatest stress test.
Profits up delinquencies down rock solid.
And it all came together with snap on sales rising organically 16, 3% versus 2020, and eight 1% versus 19 Oi margin of 19, 6% up significantly despite the virus the unfavorable currency and the acquisition impacts and the EPS $3 50, a substantial rise versus both 2020.
And 2019.
We do believe that snap on has abundant opportunity as the Covid, we cede recedes and the world shifts away from the cities and away from share transportation and as new vehicle technologies to make the car park more complex and we further believe that we are stronger today than when we when we entered the store our advantages of product brand and people are even greater.
And we're in a favorable position to wield those strengths and realize the opportunities and continue our positive trajectory throughout 2021 and beyond.
Before I turn the call over to the operator, I'll speak directly to our franchisees and <expletive>ociates many are listening.
And I want you to know that your work and this withering has made a difference to our company and to our society for your reference and keeping our world and it's critical and mobility and attack you have my admiration.
And your contribution to our progress and this first quarter you have my congratulations.
And for your unfailing dedication to our team and both smooth and turbulent times you have my thanks and I'll.
And I'll turn the call over to the operator operator.
If you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question and we will.
Pause for just a moment to allow everyone an opportunity to signal.
Okay.
And our first question comes from Gary pressed the Pinot with Barrington Research. Please go ahead Sir.
Hey, good morning, everyone.
Morning, Gary.
Questions here and there.
Yeah, we haven't really seen this kind of growth and the tools group since probably you know earlier part of last decade, a lot of that was dealing with tools storage.
And I don't think it's the same issues now and if you could cite three or four.
Things that are different and the growth metrics.
And all what you see and especially over the last couple of quarters versus what you saw maybe from tool storage was.
You know really ramping up.
And in earlier period last decade.
And I think Theres I think Theres, a couple of things I think one and this isn't a tool storage and and that it was it was a much more focused growth. We introduced the certainly the first thing is when we had that right we introduced the <unk>.
The racquetball cash and the and the tech nodes, which really focused on.
More or less a particular product line. This was this is a broader thing.
Much more rooted in you know kind of agnostic process.
From a product point of view of expanding the capabilities of the tools of the of the franchisees you know weeks harnessed social media better we're training them better day to get the elevator pitch down and we are seeing is advanced all we worked on this for four quarters before you know and maybe even in 2019, and we worked really hard and the Covid because we had time to focus on it and and that.
And is really paying off its showing that these franchisees can hit this 20 per cent. The other thing is I think boy you know I think we got some good products, particularly around hand tools, we package the hand tools. So we're selling not only individual tools, but also kits kits aimed at a particular problem and they're becoming pretty profitable. We did not popular we didn't talk about them on and on the call.
And things like putting together a set of sockets that are for particular applications and phone they're wildly popular and then the other products. We have in terms of in terms of.
In terms of tool storage and and diagnostics, there really bottle and that's.
And that's driving that that broad that broad appeal and then the final thing I think you could think look there's a lot of this is condition you can people might say this is a recovery, but you know there.
The the sales off the van all last year exceeded the sales the sales to the vans and so you wouldn't think there'd be recovery and that you know and not so much recovery in that situation.
And off the van is at the same level of the whole year was always up and same thing is happening this quarter sales off the van or the same as we're selling to them. So you look at this you might say, it's a stimulus and stimulus could be helping us. This way. We don't know when you talk to the technicians and people and effective stimulus seems to be well, it's going into bank accounts are paying off debt and the other thing.
It is by the way, we think its product and and process based because the international business U K, Australia, and and Canada are up and our regional stimulus there.
Right. Okay. That's good.
And then in terms of I.
And I guess its dealer FX couple.
Couple of questions on this one.
And what can you tell us in terms of their installed base and of course dealerships.
Versus the amount of dealerships and do you actually service can you give us some idea of just how much white space and there is out there for this product.
Got it and then they tend to be there and you know I would say you know may be in the double digit percentage of the of the other.
Of the of the of the dealerships you know, but they tend to be concentrated and a couple of couple of Oh, yeah, and so there's a lot of white space to go and that situation, we see that that tremendous opportunity and the other thing about dealer FX I think we've talked about this any acquisition, they're just now sort of rolling out.
This this new this new there they're updated a system that was ready to go but the Covid hit and you know so now they're getting a chance I get the Apple with with the with full force.
But and you know again these are things we knew when we acquired and it's early days, we've only owned them for a couple of months. So we're still getting and all but we're pretty confident we're at the right place and the right time like I said and my comments.
Are they going to be Oh, there are revenue was booked in the Orissa and all these segments.
Yeah, they're going to be and they're going to be and our tonight.
And although the universe yeah.
And because theyre going to sell the deal as you know, we see them and we see them as sort of like the advanced warning net for us from a strategic point of view you remember the old do line and I used to be across Canada to make sure. We figured out what the Russia bombers, we're doing when they're coming over the goal or the over their north. So this is the same kind of thing.
Okay. And then you also just mentioned from some new tools for the EV market could you maybe elaborate a little bit on that how we get along well and they've made those.
And those things those things are particular to a particular vehicle you know we have a business.
And we call the EQM business that really is rooted and new technology, when new technologies roll out one of the people are the oem's come to you to say hey put together a set of tools and in one of these we have set at 70.
Unit tool set that we provide that supports a certain new vehicle that's coming out.
So so I mean, that's that's that's one of the things and so and yes. There's another one for another new vehicle. So as people roll out new vehicles. They commission these kinds of things to facilitate the dealerships to be ready to deal with it and then everybody figures out what other things might happen and that shows up and we launch other tools to match that.
The Oems didn't even anticipate going for it and those are the kind of and things didn't we haven't we haven't set and we have a set of tools. We have a standard set of tools for electrics that are what we call insulating tools with a gl<expletive> and fused.
If I recall.
Cash and infuse nylon and that allows us to tell the technician to use them safely against anti approved against some pretty high voltages, and so that's sockets, and and and and and Flyers and and screwdrivers and kits to disconnect. The electric vehicle safely and that kind of thing.
Okay, and just lastly, real quick I don't want it and take up too much more time I would <expletive>ume some of these calibration tools for a das and things that you've got out. There. These are also applicable to the EV market.
Yeah Yeah.
And they're they're there and they're pretty much agnostic to the powertrain and they're more or less having to do with essential than your other neural net of the sensors around the vehicle.
Okay. Thank you so much.
Thank you and our next question comes from Christopher Glynn with Oppenheimer. Please go ahead Sir.
Thanks, Good morning congratulations.
Okay.
So one you ran through the one of Gary's question that you talked about.
You know coming up with new kits and follow on tools and new platforms.
And that forms come out and EV and elsewhere, so what underscores your visibility.
And then with the dealer FX group you talked about how that expands your visibility I'm just curious how that compares with your already seeming copious our visibility into the new platforms.
Well the thing is this is that we have.
We have we have visibility into the new platforms via our franchisees, which visit the dealers every day. So they tend to have a look at the what I would call. The more persnickety problems that that arise all the time <expletive>ociated with vehicles that no one ever anticipated. The dealer FX is the is the repair shop management.
Software, so you get to see what's happening and and in aggregate, you know kind of like and and and databases to look at this kind of thing and say, okay, well, they're having a lot of problems here and they're having a lot of problems here and you get that get to understand the difficulties <expletive>ociated with that so it's not so much and I've observational thing is a computational things those are the kinds of things that.
So it just adds to our position and then we also have and nonpareil position and the repair shops afterwards after vehicles age and they end up and independent repair shops, which is what's your what you're referring to were and more shafts for more hours in a day and that's what drives our product line. So when new technologies show and whether youre talking about automated vehicles or electric vehicles, they're going to roll through.
This we're going to see them via dealer FX, probably first and we're going to see them via the franchisees that call on the dealerships to understand the nuances of some from some smaller and more difficult problems that are harder to predict via just and maybe the bigger problems. The 20000 foot problems that the software might might see and then as they roll into the aftermarket we have.
Probably prefer almost proprietary just visibility on that that's what generates our proprietary databases that I talked about 200 billion repair records.
Great and then.
And on S. O T. You talked a lot about just the kind of throughput enhancements did these sales levels that you've seen in the past few quarters represent you know pretty pretty maximized realization.
The newly unveiled bandwidth of the franchise channel into the addressable market.
Well you know.
And that I don't know you know what I mean, I don't know that all I can always making go that high.
Normally and we now have approved it's sort of like a stress test we know they can go that high and and they're not complaining.
I had a franchisee telling me I asked him about something about its market I asked him about what is what is the market like and so and he says I don't know I'm too busy selling tools.
So he's he's out there now he didn't say you didn't have more capacity because he was asking me for more units. So you know in other words, even short of a particular product lines. So he thought he could he thought he could sell them more so we think they probably have a little more upside, but you know and this kind of situation, Chris you'd have to keep pounding we'd say, okay. We got to keep working on expanding the capabilities because.
No matter, where they are or do you want more when you go forward right.
Right. So you feel you have new food and further runway to continue to work on the throughput side of the equation sure sure sure sure.
And what happens is.
And just one question what happens as you observe what's happening at a certain throughput level and that that reveals that the.
And the pinch points and you work on there.
Great last one from me.
Finance receivable collections and exceeded additions and I don't recall, many years seeing that you're seeing more customers paying with cash.
Well, Chris I think what you see is that the technician base they are employed.
Got more money in their pocket and they seem to be servicing their debt and buying tools to supplement their needs and so I guess this book.
And overview they've provided earlier people are servicing the debt and the more a pragmatic way.
Yeah.
Sounds great. Thanks, guys.
Sure.
Thank you and our next question comes from Luke Young with Baird. Please go ahead.
Good morning, guys Alright, a couple a couple of questions first and a new term question. Nick hoping you could just talk qualitatively about daily sales trends through the quarter certainly looking at the 2019 comps for the tools group, especially help to frame the absolute level is to be really well, but I just wanted to better understand the sequential momentum.
And we saw and the first quarter.
Yeah look I think.
You know one other things we're seeing is.
You know.
Our third core third month.
Is was what was higher and in this in this period, but they're almost always higher a little bit. If you look at this so I would say we would have said that adjusted for what we expect the.
Sales were about level through the quarter, you know kind of constant.
Generally we have we have our own sort of like a view of what's going to happen. When you rollout at the beginning you know and first quarter, you know for example, and and and and and so we have some view, but this generally seemed about <unk> about what we expected.
We werent surprised by any month and this quarter I would say.
So I think I think we think it's kind of held strong each each quarter I don't see attenuation.
And if that's what you're asking.
It is thanks for that and then.
And I don't we didn't see and it anyways.
Okay, and then a bigger picture question more on the strategy side and it's you know it's kind of already a couple of times. This morning in terms of the big shifts that we've seen and the new car market in the past say six or nine months with respect to metrification, especially eight <expletive>ets as well and you know all these changes take a while of course, just ultimately and Phil.
And through to the aftermarket, hoping you could just expand on how these changes are impacting your thinking around investment priorities today, both organically and M&A and should we think that for instance, the impacted the thinking around the dealer affects acquisition for example.
Well, Yeah, I mean, and then sure look we like change.
Like we said I think we've said until the dogs. So the house come home that change is our friend and we love to have it and the earlier, we can see change the more weekend and as you say call and the air strikes about investment and so on.
And so the dealer FX acquisition was about positioning ourselves at the at the forefront at the Vanguard. If you will of new technologies, not just electric vehicles, but new technologies that would impinge on the car Park now so that's what we're doing and so we will continue to look at that in terms of okay. What do we.
And from that how can we invest and other places to follow that change, but make no mistake about it.
The revelations occur in each aging of the vehicle.
So things change as you roll out when the vehicle rolls in people think this is what's needed and then couple of years ago by and we see that these are what's needed and some of it isn't even then this is what I was trying to say before is some of it isn't the fact that you have to repair let's say the you know a particular item or you have to recalibrate that.
Sensors, it might be revealed to us and the difficulty of doing those products those processes, which everybody everybody. You first you understand home you got to do it and then he realized wait a minute on these particular vehicles you need special tools just to do them, because they're configured and an odd way this is and and we've learned that as it went through and so.
So basically we see ourselves this electric vehicle the E V. The new technologies and it's just a version of what's happened before only maybe hopefully at a faster pace, which gives us more to sell and so are our activities will be to try to anticipate those changes more quickly invested them and then.
And joy.
Okay.
Okay.
Okay, Great I'll leave it there.
Okay, and we'll take our next question from Scott <unk> with C. L. King. Please go ahead.
Good morning, guys and congrats on the strong results from the quarter.
Thank you.
Thank you Aldo you might have answered this question, but.
The growth and originations versus the tools organic sales.
Obviously, there's a pretty big Delta there is that entirely because more.
You're seeing more mechanics.
You know basically buy with cash and was there something else and some other new ones that we sell.
And I don't think Scott I think there's a little bit I think theres more cash and the system. So that's probably if anything thats, probably not a negative and it's probably a positive I think that again and you're still at stages, where your psychological recovery is not completely the same everywhere and the country. So I think people broadly speaking is still a little bit more measured when they approach big.
Good items as compared to hand tools power tools and things of that nature I still think there's that nuance, but.
When the tools group sales and 45% organically without having to dig deep into extended credit and we feel that means those borrowing capacity down the road that opens up future opportunities for them. So we kind of like the mix in that respect.
Got it.
And and artists and IV on the car care I mean that was the first time, we've seen a major increase like that and a while so I'm.
Wondering is that being driven by stronger collision market demands and if so.
What are you hearing about miles driven because obviously collision repair is based a lot of and is based on the milestone.
Look I think I think actually it's not really.
Collision repair was better and the United States not so good and Europe are you know that I would say the big feature there for us was.
The under car equipment of liners in particular, but it's a D E F and stuff you know stuff that really focuses on the neural network of the business. That's what drove that change you're right and it was a really welcome change double digits for the equipment that was a turn of events that we really love, we haven't talked about and talked about and things like that <expletive>ociated with Q1 and in a while so that's.
Part of the overhang.
Because it's a lower margin business, that's part of the mix overhang on our Tonight, but that turned out.
Inc. Based on the the the change and in and vehicle complexity now do.
Driven by the autonomy. These autonomous features and therefore under car equipment, what was important and we're starting to see some recovery and collision and.
And the U S. Like I said Europe seems to be dead as a doornail the miles driven and you know we're seeing it start to come back the curve looks just like other years. It just came back from a from the shock of the virus. So it went down 30% year over year and the and the shock and now it's you know according to.
BLS day, according to the data, we see it staying around 10% below pre COVID-19 levels and its inching back I would expect though that you know as people look and and that's not surprising every time, you turn on TV and see people beaming and from home once people go back I think this all changes.
Yeah.
Got it and just the last question Flushing out the tools group and have you said.
And it was pretty much everything was up but it sounds like hand tools and diagnostics, probably led the way.
And I.
Yes, yes.
And that pretty much everything was up but to a hand tools led the way diagnostics was strong power tools was nice.
As well so smaller ticket items, where you know our our ascend it and this period you can see our RA business, although it kind of sets because the guys are a little more.
Yeah like I used the word theres still an Arab vigilance, there and there are positive, but theyre little more vigilant and this situation and so even the tool storage they tend to be focused on that day.
And the smaller purchases and the tool storage area, so that thing, but I would say that each of the opera each other each of them each product line had a pretty good quarter, maybe not upset a 25% we're pretty satisfied with almost all the product lines, but the top one was hand tools.
And.
Got it that's all I have thank you.
Thank you.
Thank you and our next question comes from Curtis Nagle with Bank of America. Please go ahead Sir.
Oh, Hey, guys. Good morning, Thanks very much.
Good good how are you.
Yes.
Quick one on <unk>.
Inflation, so you know and thank you.
And so there's plenty of times I think steel is only I don't know 80, 590 and bill of.
Cogs, but price is up a good bit.
And I'm pretty persistently so anything in terms of and.
And your price increases or you know rising costs relating to our inputs.
I would elaborate on.
Yeah look I, yeah, well look we've got we've got material inflation and these numbers.
And you can't see him, Kenya, right, and and and and and so you know part of the thing is you got you got you kind of got and interesting cocktail of reduced travel controlled costs and material inflation flowing through this and the general managers and our bridges are balancing all these like balls and the are you now and so yeah, we might see some book.
We're not you know at the same time, we can also price and I think the tools group you know Scott.
<unk> got another price increase going out and are they just announced and and April early April and announced the price increase that are going to have one coming up and so we think we're the price leader and we can price per visual and inflation. So you have that and mix and the and the play too. So we might see some going forward, but we think it's other control I mean this is I think I've said it and another for them that this is kind of what.
They pay us for to manage this stuff.
Okay fair enough.
And then.
And so it wasn't a mistake and did it did I hear that the.
Education segment was up a bad one Q.
Yeah, what what happened there that's good and well look I think yeah. I think everybody is anticipating the schools I think I think there are some schools back and then but I would say the big factor Kurt is that the schools are starting to anticipate the return other students.
So that's starting to facilitate so the LG and the education business was up principally because you're selling to the schools you know and.
And so we have a two pronged view that we felt that our students and schools and we see a lot of students starting to warm up and I think I also think and this day and age they're starting to see you know.
If I were sitting in and our community College and I'd see the bike and administration rolling in there and I don't think it's a political statements and reveal that he has a particular band given his wife's orientation, you know and and things. He said to community College technical training and so I think that might be a positive view and cradle and air of optimism and the school so I think that Chi.
<unk>.
<unk> the dynamic zone. It was but we're pretty pleased to see it and in fact, and you know again and that the critical industry businesses got back above the you know above the pre COVID-19 levels I think that I don't want people to Miss that you know, where we're above pre COVID-19 levels.
And by the way we're bearing the COVID-19.
At the same time, so I think that and and and that's where C&I was they've been going each quarter, they've been getting a little closer to 2019. This time they flipped above it we view that as an incredibly positive events.
Got it makes sense for cash thanks, very much good luck for sure.
Thank you and our next question comes from David Macgregor with Longbow Research. Please go ahead.
Yes, good morning, everyone and.
Net congratulations and congratulations on the strong results.
And I guess first question and I'm still really struggling on this disparity between originations and the sell through you indicated the sell through was equivalent with the sell in and so what's called the sell through.
<unk> 25 per cent originations up two 4%, which is well worth it.
A minute wait a minute wait a minute.
And quickly.
And just a minute and.
And sell through was equal absolute it was a little bit better and the first quarter of last year. So when you compare and those things just start to get Bollixed up a little bit you know last year wasn't as bad sell through.
Is it as sales to the vans was and the first quarter.
And what we saw from Evercore.
General and you come back and say what makes you. So I just wanted to stop you there, but but in general if you're talking about volume the volume off the van same as the volume on events this quarter.
Honestly and what I said he was.
And I'll go on cash.
What is that we'd be using those and sell through number for this quarter Bob.
And while it's roughly and I'm, saying, it's roughly the same.
And at the same as the sell in.
Right.
Okay.
It's a large disparity. Nonetheless, however, you want to cut it and and I guess I'm really struggling with just kind of the nature of that given you also and the kids and all of the segments are up.
And I guess the question just becomes given that originations generally revolve around extended credits and.
And and.
Contract credits, obviously as well, but it's big it's bigger ticket. So I guess the question is just can you can you break out big ticket force and help US just understand what big ticket was on a year over year basis.
Here's what I, here's what I would tell you is that the big ticket items weren't up.
And.
Weren't up like the 25%, but they were up nicely in the quarter.
So they were all digits.
And they werent up double digits and the quarter, but they were up again when you look at the absolute numbers they were reasonable and that situation. So we're pleased with those numbers. So you had that and then then within the big ticket items and then let's put diagnosis and we look at tools storage. The tool storage mix has been for awhile and closer to the let's say cash.
Parts, and and and other things and <unk> and <unk>.
And there's a lot more or a going on and so the franchisees are flushed with cash and cash so you're seeing some of those franchisees finance. These items, that's really the factor.
Now you could argue that you could also argue a day that were you know and I think that's really what's going on and you can also see it's hard to tell this you could see we're getting stimulus money to pay for some of those things instead of borrowing and we kind of view that is great because as al said, you just got borrowing capacity out there and our future.
So this is a really good thing for us we love it when our raise up.
Okay, well, maybe I'll I'll take this offline with Aldo and try and get through the math, a little bit better I wanted to ask you about you.
You didn't get let's just volumes on the quarter, because you'd indicated that you've announced in April a price increase which I think is my first.
You've got them kind of to me.
And the catered to the franchisees that you're experiencing growing backlogs and I know, if that's round tool steel and what might be responsible for that but under those circumstances and my understanding is there's been there's some pre buy going on and the month of March and just.
Wondering if you can quantify for us the extent to which I think if I'm missing from that.
Yes.
I'm, sorry, I don't I don't I don't I don't think that I don't we don't think that's true first of all the announcements goes out in April. So I don't think people are pre buy and the people may be buying generally what what happens and these kinds of things are buying off the off the kickoff programs or are they even even back to the kickoff program. So there.
Fundamentally buying off that we you know I'm talking to a bunch of franchisees and they keep telling me their inventories are low on this stuff they can't and that they'd like to get more but they don't get them they don't happen.
So I think this is a you know the idea of the pre buy.
And we didn't see any of that now I'm, not saying, you know franchisees or what 3500 of them.
So you can get windshield surveys on them and you can get different ones will have different views and I could probably get 100 different opinions when I go out, but generally we don't see that day.
We see the situation.
You know, they're not stocking and the fact, we think we're confident that.
Franchisees inventories are actually down you know were flat at best and they're not up really and if you look back soon.
And you look back to the first quarter of last year sales off the van exceeded sales to demand.
Yeah.
And that little surprising given everybody in the franchise world knows that the stimulus money coming down the pipe and they'd want to be positioned for that and then my understanding is you communicated to the franchisees that there was a backlog issue in March and.
And I presume that wood.
With pre buy on that so I'm always surprised to hear that inventories on the trucker or flat to slightly down.
[noise] lip and little Counterintuitive I guess and then last question from me, it's just on price elasticity.
And we see it that way, but it but anyway necessarily they could order, but they might not happen.
Yeah, Okay, right and can you just talk about can you just talk so you wouldn't have a sales.
Right.
Okay and.
And then personal loss yesterday around storage I guess you know these are some pretty big increases, we're seeing and and steel prices right, now and and and and as a consequence I would expect some pretty big increases on a per se and so some of the storage product and at least and and maybe and hand tools given what's going on with.
You don't think of alloy product, but can.
Can you just talk about how you expect that to play out over the balance of the year as you raise your prices.
Oh vulnerable do you think that category is the higher prices given.
And I'd say there.
Alright, and look I think I think it gets to be a complex question. David because you know almost everything is you know there's a lot of promotions close and through the systems. So it's not just it's not just a just a list price increase and it's also what are your promotions and so on and so we've never had a problem tool storage or otherwise in terms of.
Getting or matching inflation, we've never seen that.
So I can only tell you what is and history and it's it's it's a it's a complex cocktail you raised the list price.
Gesture promotions Yep Yep long term promotions, you have dropped and promotions, it's a dizzying array of those things and what comes out the other and is a matching of the other inflation. So generally we feel we can do that on a macro basis.
No.
And and and and you can't do that unless you do it until storage and handles.
Right.
I'm Mark works around the mechanics capacity to purchase.
And their purchasing power and.
And I'd be cautious and find themselves a little out of reach.
We're not concerned about that right now and youre not taking a day.
We don't see that he and a problem right now and there was inflation and you know there was inflation and this period and all.
So I mean and things, we don't see that being a problem now.
Of course, you can't say it forever, but I think it's Leslie I think the whole thing into this the mechanics seemed the loves to buy tools.
One other top things on our priority and I think that these kinds of changes don't necessarily make a difference now who's to say, how the inflation would play out across the country and a lot of different commodities, but I think I would tell you. This I think we were going to be one of the last to be affected by it.
Right.
And if I could just look the model two quick ones.
What was the U S versus international in terms of the pillar growth and sound the same percentage of problems and things.
And secondly, what percentage of trucks, now and two <expletive>ociates and how has that changed year over year.
Got it.
It's about it's about the same it's up a little bit you know its and the it's in the 20 to 25 per cent range.
Okay. Thanks, very much channel.
Sure.
And that concludes today's question and answer session Misheard ski at this time I would like to turn the conference back to you for any additional or closing remarks.
Okay.
Thank you all for joining us today, a replay of this call will be available shortly on snap on dot com as always we appreciate your interest and snap and good day.
And this concludes today's call. Thank you all for your participation you may now disconnect.
Okay.
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