Q3 2023 Snap-on Inc Earnings Call

Speaker 1: Oh.

Okay.

Speaker 2: Good morning and welcome to the Snap-on Incorporated 2023 third quarter conference call.

Good morning, and welcome to the snap on incorporated 2023 third quarter Conference call.

Speaker 2: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

All participants will be in listen only mode.

You need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Speaker 2: After today's presentation, there will be an opportunity to ask questions.

After todays presentation, there will be an opportunity to ask questions.

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To ask a question you May press Star then one on your telephone keypad.

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Speaker 2: I would now like to turn the conference over to Sarah Bursky, Vice President of Investor Relations. Please go ahead ma'am.

I would now like to turn the conference over to Sara <unk>, Vice President of Investor Relations. Please go ahead ma'am.

Speaker 3: Thank you Rocco and good morning everyone. We appreciate you joining us today as we review Snap-on's third quarter results, which are detailed in our press release issued earlier this morning. We have on the call Nick Pinchuk, Snap-on's Chief Executive Officer, and Aldo Polliari, Snap-on's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance. Aldo will then provide a more detailed review of our financial results. After Nick provides some closing thoughts, we'll take your questions.

Thank you Rocco and good morning, everyone. We appreciate you joining us today as we review snap on third quarter results, which are detailed in our press release issued earlier. This morning, we have on the call Nick Pinchuk Snap ons, Chief Executive Officer, and Al will probably Ari snap ons, Chief Financial Officer, Nick will kick off our call. This morning with his perspective on <unk>.

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 in the webcast viewer as well as on our website snap on dot com under the investors section these slides.

Speaker 3: As usual, we provided slides to supplement our discussion. These slides can be accessed under the Downloads tab in the Webcast Viewer as well as on our website Snap-on.com under the Investors section.

Speaker 3: These slides will be archived on our website along with a transcript of today's call.

It 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 that otherwise discuss management's or the company's outlook plans or projections are forward looking statements and actual results may differ materially from those made in such statements additional information.

Speaker 3: Any statements made during this call relative to management's expectations, estimates, or beliefs, or that otherwise discuss management's or the company's outlook, plans, or projections, are forward-looking statements, and actual results may differ materially from those made in such statements. Additional information and the factors that could cause our results to differ materially from those in our forward-looking statements are contained in our FCC filings.

And the factors that could cause our results to differ materially from those in our 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 in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our earnings release.

Speaker 3: Finally, this presentation includes non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our earnings release issue today, which can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick? Thanks, Sarah. Thanks, Sarah.

Today, which 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.

Speaker 4: As usual, I'll start by covering the highlights of the quarter, and then I'll provide an update on the general environment and on the trends.

As usual I'll start by covering the highlights of the quarter and then I'll provide an update on the general environment the trends we see.

Speaker 4: Aldo will then give you a detailed review of the financials.

Aldo will then give you a detailed review of the financials.

Thinking about the last three months.

Speaker 4: I can say without question or qualif-

I can say.

Question for qualification.

Speaker 4: We are once again encouraged, fortified by the progress along our runways for growth and improved.

Are once again encouraged fortified by the progress along our runways for both growth and improvement.

Speaker 4: We encountered headwinds and we engaged challenges in a number of geographies. Still, we capitalized on our opportunities, wielding our advantage and overcame the potential for disruption.

We encountered headwinds and we engaged challenges in a number of geographies still we capitalized on our opportunities wielding our advantage and overcame the potential for disruption.

Speaker 5: The franchising network remains resilient, generating positive gains.

The franchisee network remain resilient generating positive gains.

Speaker 5: There were broad and sharp rise in critical industries, extending what is now a consistent upward trajectory enabled by the confluence of a robust market, a growing product line, and an effective expansion and capacity in that business. And that progress was pretty evident.

So were broad and sharp rises in critical industries, expanding what is now a consistent upward trajectory.

Trajectory enabled by the confluence of a robust market a growing product line and in effect of expansion capacity in that business and.

And that progress was.

Pretty evident in our numbers they speak for themselves.

Speaker 5: reported sales were 1 billion, 159 million, up 5.2% from last year, a 4.7% organic rise, and 4.4 million in favorable foreign currency effects with growth in every state.

Reported sales were $1 billion $159 million up five 2% from last year, a four 7% organic rise and $4 4 million and favorable foreign currency effects with growth in every segment.

Speaker 5: This represents our 13th quarter well above pre-pandemic levels. Op-Go operating income, OI, before financial services drop 9.7%, reaching 245.2 million. Op-Go operating margin rose 90 basis points to 21.2% with higher sales lines, the benefits of great new products, and the ongoing efficiencies of our rapid continuous improvement or RCI, more than offsetting a 50 basis point.

This represents our 13th quarter, well above pre pandemic levels Opco operating income OID before financial services were up nine 7%, reaching $245 2 million Opco operating margin Rose nine rose 90 basis points to 21, 2% with higher sales volumes the benefits of <unk>.

Great new products and the ongoing efficiencies of rapid continuous improvement or RCI more than offsetting up 50 basis 50 basis points.

Speaker 5: of bad news from unfavorable foreign currency effects. 21.2% and 90 basis points.

Bad news from unfavorable foreign currency effects, 21, 2% and 90 basis points nice.

Operator: Good morning and welcome to the Snap-On Incorporated 2023-3rd quarter conference call. All participants will be in listen-only mode. Should you need assistance, please sign away conference specialists by pressing the star key followed by zero.

Speaker 5: The operating income for our financial services operation grew 69.4 million from the 66.4 million last year, a 4.5 percent improvement. And that result combined with the op-copal performance to raise our consolidated operating margins to 25.1 percent, a 70 basis point rise from 2022.

The operating income from our financial services operations grew $69 4 million from the $66 4 million last year, a four 5% improvement in our results and that was all combined with the Opco performance to raise our consolidated operating margins to 25, 1% a 70 basis point rise from two.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star than one on your telephone keypad. To withdraw your question, please press star than two. Please note today's event is being recorded.

'twenty two.

Speaker 5: An EPS, EPS is $4.51, reflecting a 37 or 8.9% increase above last year.

And EPS EPS was $4 31.

Sara Verbsky: I would not like to turn the conference over to Sara Verbsky, Vice President of Investur Relations. Please go ahead, ma'am. Thank you, Rocco, and good morning, everyone. We appreciate you joining us today as we review Snap-On Third quarter results, which are detailed in our press release issued earlier this morning. We have on the call, Nick Pinchuk, Snap-On's Chief Executive Officer, and Aldo Pagliari, Snap-On's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance.

Reflecting a 37 or eight 9% increase above last year.

Strong.

Well those are the numbers.

Sara Verbsky: Aldo 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 SnapOn.com under the Investor 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 that otherwise discussed management or the company's outlook, plans, or projections are forward-looking statements, and actual results may differ materially from those made in such statements.

Speaker 5: once again strong, signifying our corporations continuing in advance. You see, we again believe that snap on a stronger now than at any time in our history. And the results, they say it's so.

Once again strong signifying our corporations continuing in advance so we.

We again believe that snap on is stronger now.

And at any time in our history and the results they say itself.

Now, let's review the markets.

Speaker 5: In vehicle repair, the key metrics continue to be favorable. The average age of vehicles on the road continuing to rise. And in turn, the number of texts in the garages, in the garages growing high to mid-single digits, maintaining consistently positive trends, period over period over period, that's clearly upward. And text...

In vehicle repair the key metrics continue to be favorable the average age of vehicles on the road continuing to rise and in turn the number of attacks in the garages and the garage is growing high high to mid single digits, maintaining a consistently positive trend period over period period over period, that's clearly upward.

A technician wages are robust and continuing decline so the market is favorable and our metrics back it up but more than a quantitative evidence you get the feeling.

Speaker 5: our robust and continuing to climb. So the market is favorable and the metrics back it up, but more than the quantitative evidence, you get the feeling of optimism potential when you speak with tech.

Of optimism potential once when you speak with technicians.

Speaker 5: recently uh... i had the chance to visit uh... with our customers franchise the mechanics in new york and i'm here to tell you the enthusiasm they just played in the industry and that the confidence they expressed in their their future with something else

Recently I had the chance to visit with our customers franchisees mechanics in New York and I'm here to tell you the enthusiasm they displayed in the industry and the competence of the expressed in are there future was something else. It was contagious even in this time of turbulence the message was clear.

Sara Verbsky: Additional information and the factors that could cause our results to differ materially from those in our forward-looking statements are contained in our SEC filings. Finally, this presentation includes non-get measures of financial performance, which are not meant to be considered an isolation or as a substitute for their Gap counterparts. Additional information regarding these measures is included in our earnings release issue today, which can be found on our website.

Speaker 5: It was contagious. Even in this time of turbulence, the message was clear. They see opportunity and they're looking for more.

See opportunity and they are looking for more more innovative solutions that will increase productivity and take advantage of that potential and their confidence on the way forward is palpable and we believe they see snap on products brands and people as the best way to ensure that positive future.

Speaker 5: more innovative solutions that will increase productivity and take advantage of that potential. And their confidence on the way forward is palpable. And we believe they see Snap on products, brands, and people as the best way to ensure that positive future.

Nicholas Pinchuk: With that said, I'd now like to turn the call over to Nick Pinchuck. Nick, thanks Sarah. Good morning everybody. As usual, I'll start by covering the highlights of the quarter, and then I'll provide an update on the general environment and on the trends we see. Although, we'll then give you a detailed review of the financials.

Vehicle repair is a strong market.

Speaker 5: We see this confirmed throughout the franchisee's network in North America and in our international operations. It's one of the reasons we've expanded capacity. We believe our franchisee's and our technicians have never been more prosperous. It only sends. The car park is increasingly requires more repairs of greater complexity. And our customers, the techs, are major participants in that reality. They need new tools to follow the opportunity.

We see this confirmed throughout the franchisees network in North America and in our international operations. It's one of the reasons. We've expanded capacity, we believe our franchisees and our technicians have never been more prosperous it all makes sense the car park.

Nicholas Pinchuk: Speaking about the last three months, I can say, without question or qualification, we are once again encouraged, fortified by the progress along our runways for both growth and improvement. We encountered headwinds, and we engaged challenges in a number of strategies. Still, we capitalized on our opportunities, wielding our advantage, and overcame the potential for disruption. The French ASEAN Network remained resilient, generating positive gains to a broad and sharp rise in critical industries, extending what is now a consistent upward trajectory enabled by the confluence of our robust market, a growing product line, and an effect of expansion and capacity in that business.

Is increasingly requires more repairs with greater complexity and our customers. The tax are major participants in that reality, they need and they need new tools to follow the opportunity snap on is positioned to take full advantage of that possibility.

Speaker 5: Snap-on is positioned to take full advantage of that possibility.

Speaker 5: Another important sector for us is the vehicle of Parishoppa on his and manages. Stay at it. These are people who stand right next to the text, but they buy a different cadence.

Another important sector for us is the vehicle repair shop owners and managers stay leisure people to stand right next to the textbook they buy at different cadences.

Speaker 5: This is where repair systems and information group are, and I operate every day with advantage. The vehicle park is changing. The shops have to keep adjusting, model by model. New challenge.

This is where rhopressa was up repair systems <unk> information group of our C&I operates every day with advantage. The vehicle park is changing the shops up to keep adjusting model by model new challenges.

Speaker 5: New challenges that they have to navigate. Electronics to support more features, automotive systems that enhance driver safety, new body materials to increase durability and reduce weight, networks of sensors to anticipate traffic and road conditions, new powertrains, enhanced internal combustion engines, EVs and plug-in hybrids, and...

New challenges that they have to navigate electronics to support more features automotive systems that enhance driver safety nobody materials to increase durability and reduce weight network of sensors to anticipate traffic and road conditions, no powertrains enhanced internal combustion engines, evs and plug in hybrids.

Nicholas Pinchuk: And that progress was pretty evident in our numbers. They speak for themselves. Reported sales were 1 billion, 159 million, a 5.2% from last year, a 4.7% organic rise, and 4.4 million in favorable foreign currency effects with growth in every state. This represents our 13th quarter well above pre-pandemic levels. Op-Go operating income OI before financial services dropped 9.7% reaching 245.2 million. Op-Go operating margin rose 90 basis points to 21.2% with higher sales volumes, the benefits of great new products, and the ongoing efficiencies of our rapid continuous improvement or RCI, more than offsetting a 50 basis point of bad news from unfavorable foreign currency effects.

Speaker 5: to conserve energy and on and on and on. Each of these trends creates opportunity for garages and they know it. But they also know it requires new and more sophisticated equipment, the opportunity, that opportunity we see shines right through political uncertainty or economic turbulence.

To conserve energy and on and on and on each of these each of these trends creates opportunity for garages and they know it.

But they also know it requires newer more sophisticated equipment the opportunity that opportunity, we see shines right through political uncertainty our economic turbulence.

Speaker 5: We see that in their needs every day when we call on the garage.

We see them and their needs every day, when we call on the garages.

Speaker 5: New software to guide repairs or manage the shop. Essential programs to accommodate the unit's syncronies of new vehicles. Calibration protocols and advanced systems for sensor array advanced undercar equipment to accommodate the precision that supports efficient driving.

New software to guide repairs or manage the shop, a central programs to accommodate syncrisis of new vehicles calibration protocols and advanced systems for sensor arrays advanced under car equipment to accommodate the precision the precision that that supports efficient driving.

Nicholas Pinchuk: 21.2% and 90 basis points, nice. The operating income for our financial services operation grew 69.4 million from the 66.4 million last year, a 4.5% improvement. And that result combined with the op-go performance to raise our consolidated operating margins to 25.1%, a 70 basis point rise from 2022. An EPS, EPS is $4.51, reflecting a 37 or 8.9% increase above last year. Strong. Well, those are the numbers, once again strong, signifying our corporations continuing in advance. You see, we again believe that snap on a stronger now than at any time in our history and the results, they say it so.

Speaker 5: And we see the shop owners and managers eager to take advantage of those trends. Snap-on has the hardware and software that enable that pursuit, bringing prosperity to the shops, and the results in RS and IR confirming the strength of that market. And I...

And we see the shop owners and managers eager to take advantage of those trends snap on has the hardware and software to enable that pursuit, bringing prosperity the shops and the results in <unk> and I are confirming the strength of that market.

Our strong position in it.

Speaker 5: Finally, let's discuss the critical.

Finally.

Let's discuss the critical industries.

Speaker 5: This is where we extend outside the garage, solving tests that really matter.

This is where we extend outside the garage solving tests that that really matter.

Speaker 5: This is where commercial industrial and or sea and I live. And where much of our international activity happens. This is the arena of critical applications, space declarations, wind power maintenance, subsea mining, smelting that exceeds 2,300 degrees Fahrenheit. The mobilization of first responders, all critical environments where the penalty for failure was high and the need for repeatability and reliability often requires custom tools engineered for a single purpose. In other words, tasks that require a snap on solution. Just like in previous...

Our commercial industrial and towards C&I lifts and where much of our international activity happens. This is the arena of critical applications space Exploration's, Windpower maintenance subsea mining smelting that exceeds 2300 degrees Fahrenheit. The mobilization of first responders all critical environments, where the penalty for failure was high and the need for repeatable.

Olivia reliability, often requires custom tools engineered for a single purpose.

Nicholas Pinchuk: Now let's review the markets. In vehicle repair, the key metrics continue to be favorable. The average age of vehicles on the road continuing to rise. And in turn, the number of techs in the garages, in the garages growing high to mid-single digits, maintaining consistently positive trend period over period, period over period that's clearly upward and technician wages are robust and continuing to climb. So the market is favorable and the metrics back it up, but more than the quantitative evidence, you get the feeling of optimism potential when you speak with technicians.

Other words tasks that require snap ons solution just.

Just like in previous quarters.

The market is booming.

Speaker 5: momentum in multiple sectors like the military general industry aerospace heavy duty in aviation Of course we just see variations from geography to geography. This is an international business Areas impacted by external factors that create disruptions Europe with the uncertainty associated with the Ukraine war in Asia Where the remnants of the pandemic are still pretty apparent? There's turbulence in China and the weakening of currencies are These days are impacting particular countries

Momentum in multiple sectors like the military general industry aerospace heavy duty in aviation.

Of course, we just see variations from geography to geography. This is an international business areas impacted by external factors that create disruptions Europe with the uncertainty associated with the Ukraine War in Asia, where the remnants of the pandemic are still pretty apparent there's turbulence in China and the weakening of currencies are these days are impacting.

Nicholas Pinchuk: Recently, I had the chance to visit with our customers, franchise the mechanics in New York. And I'm here to tell you, the enthusiasm they displayed in the industry and the confidence they expressed in their future was something else. It was contagious. Even in this time of turbulence, the message was clear, they see opportunity and they're looking for more, more innovative solutions that will increase productivity and take advantage of that potential. And their confidence on the way forward is palpable.

<unk> countries.

But overall the.

Speaker 5: The critical industries are robust, offering us significant potential for taking advantage and making significant gains. And in the quarter.

The critical industries are robust offering us significant potential for taking advantage and making significant gains.

And in the quarter, we did just that.

Speaker 5: So our market service is really an honor and positive trajectory. And we believe that our runways for growth will present clear and abundant opportunities as we move forward, enhancing the franchise network, expanding where we perish up on our managers, extending to those critical industries. And...

So our markets are resilient and are on a positive trajectory and we believe that our runways for growth, we will present clear and abundant opportunities as we move forward enhancing the franchise network expanding repair shop owners and managers extending to those critical industries.

Nicholas Pinchuk: And we believe they see snap on products, brands, and people as the best way to ensure that positive future. Vehicle repair is a strong market. We see this confirmed throughout the franchisees network in North America and in our international operations. It's one of the reasons we've expanded capacity. We believe our franchisees and our technicians have never been more prosperous. It only sends. The car park is increasingly requires more repairs of greater complexity and our customers, the techs, our major participants in that reality. And they need new tools to follow the opportunity, snap on its position to take full advantage of that possibility.

And building in emerging markets.

Speaker 4: Rising by, rising, and going forward by leveraging our burning product line, wielding our strengthening brand, deploying and deploying the increasing understanding of the work that is the whole mark of the snap on T. That's the markets. Now let's...

Rising by rising.

Going forward by leveraging our broadening product line wielding are strengthening brand deploy and deploying the increasing understanding of the work that is the hallmark of the snap on team.

That's the markets.

Now, let's turn to the segments.

In the C&I group third quarter sales reached $266 4 million up $9 6 million, which includes $1 6 million of unfavorable currency effects and on organic sales growth of three 2% above last year.

Speaker 5: 266.4 million, up 9.6 million, which includes 1.6 million and unstable currency effects. And an organic sales growth of 3.2% of the last-

Speaker 5: from an earnings perspective, CBI's operating income was 58.1 million, up 11.1% double digits, including 2.9 million of unsavoryable foreign cards.

Nicholas Pinchuk: Another important sector for us is the vehicle repair shop owners and managers. Stay at it. These are people who stand right next to the techs, but they buy a different cable. This is where repair systems and information group are, and I operate every day with advantage. The vehicle park is changing. The shops have to keep adjusting model by model. New challenges. New challenges that they have to navigate. Electronics to support more features.

From an earnings perspective, C&I operating income was $58 1 million up 11, 1% double digits, including $2 9 million of unfavorable foreign currency.

Speaker 5: And the operating margin was 15.9%.

And the operating margin was 15.

9%.

Speaker 5: an increase of 120 basis points overcoming 70 basis points of negative current.

An increase of 120 basis points, overcoming 70 basis points of negative currency.

Speaker 5: We did have some variation across the group business units with substantial gains in industrial vision while setting the clients in the age operations.

Nicholas Pinchuk: Automotive systems that enhance driver's safety. New body materials to increase durability and reduce weight. Networks of sensors to anticipate traffic and road conditions. New power trains. Enhanced internal combustion engines, EVs and plug-in hybrid, and the conserve energy. And on and on and on. Each of these, each of these trends creates opportunity for garages and they know it. But they also know it requires new and more sophisticated equipment. The opportunity, that opportunity we see shines right through political uncertainty or economic turbulence.

We did have some variation across the group across the group business units with the substantial gains in industrial vision offsetting declines in the Asia operations.

But as usual there.

Speaker 4: The CNI rise showed the power of our SAP on value creation, particularly in customer connection innovation, authoring great new products, solutions that make critical tests easier, like our new CT9038 Power Tool. We talked about this, we talked about this to a last quarter. Things the franchisees were waiting for at launch, well it was worth the wait, it's a special tool.

The C&I rise showed the power of our snap on value creation, particularly in customer connection innovation authoring great new product solutions that make critical path easier like are arguing <unk> 938 power tool. We talked about this we talked about this tool last quarter things. The franchisees were waiting for its launch well. It was worth the wait is a special tool.

Speaker 5: a 3-H-inch drive, 18-volt impact unit that offers compact housing, measuring only five inches long. That's what we call the stubby. The unique silhouette is made possible by engineering the overall housing mechanism to stabilize the electric motor, rather than the standard approach, of adding a whole independent structure to support the drive components. It's an innovation that reduces overall body dimensions, allowing users to navigate really tight spaces and believe me.

A three agents drive 18 volt impact unit that that that offers compact housing measuring only five inches long that's why we called the stomach. The unique silhouette is made possible by engineering. The overall housing mechanism to stabilize the electric motor rather than the standard approach.

Nicholas Pinchuk: We see though that, and or need, every day when we call on the garages. New software to guide repairs or manage the shop. Essential programs to accommodate the desyncrasies of new vehicles. Calibration protocols and advanced systems for sensor array. Advanced undercar equipment to accommodate the precision that supports efficient driving. And we see the shop owners and managers eager to take advantage of those trends. Snap-On has a hardware and software to enable that pursuit, bringing prosperity to the shops and results in arts and I are confirming the strength of that market and our strong position in it.

Adding a whole independents the structure to support the drive components, it's an innovation that reduces overall body dimensions, allowing users to navigate really tight spaces and believe me.

Speaker 5: That's an attractive advantage for engine and suspension work on newer vehicles. And it does that while still delivering 520 footpiles of bolt breakaway torque. Power capable of blasting loose even the most stubborn, up seized and seized fast.

It's an attractive advantage for engine and suspension work on newer vehicles and it does that while still delivering 520 football the bolt breakaway torque power capable of busting loose even the most stubborn up see it up seized and seized fasteners.

Nicholas Pinchuk: Finally, let's discuss the critical industries. This is where we extend outside the garage, solving tests that that really matter. This is where commercial industrial and or CDI lives. And where much of our international activity happens. This is the arena of critical applications, space declarations, wind tower maintenance, subsea mining, smelting that exceeds 2,300 degrees Fahrenheit. The mobilization of first responders. All critical environments where the penalty for failure was high. And the need for repeatability and reliability often requires custom tools engineered for a single purpose.

Speaker 5: It's what you would expect from Snap-on. It's an ergonomically balanced, it's ergonomically balanced, greatly reducing user fatigue. It's equipped with a super bright LED light to clearly illuminate the workplace. It also offers three torque settings and four-order reverse, and includes a variable speed trigger, enabling text to apply just that necessary force, avoiding the fastener damage. That often can happen in tight spaces. The September launch was big.

It's what you would expect from snap on it's an ergonomically balanced it's ergonomically balance greatly reducing user fatigue is equipped with a super bright led light to clearly illuminate the workplace. It also offers three torque settings in Florida in reverse and includes a variable speed trigger enabling text to apply just that necessary for us.

Avoiding the fastener damage that often can happen in tight spaces.

The September launch was a big one.

Wayne Oversubscribed.

Speaker 5: Clear testimony to the appreciation of the stubby's compact power and it's still showing great momentum. The orders remain very strong.

Nicholas Pinchuk: In other words, tasks that require a snap-on solution. Just like in previous quarters, the market is booming. Momentum in multiple sectors, like the military, general industry, aerospace, heavy duty, and aviation. Of course, we just seen variations from geography to geography. This is an international business. Areas impacted by external factors that create disruption in Europe. With the uncertainty associated with the Ukraine war in Asia, where the remnants of the pandemic are still pretty apparent.

Clear testimony to the depreciation of the <unk> compact power and it's still showing great momentum the orders remain very strong.

It was worth the wait.

Speaker 5: CNI product is encouraging, but there's another story in the group.

C&I products is encouraging but the but there's another story in the group.

Our industrial Division.

Speaker 5: extending the staff on brands of the critical industries we've said in the past that the opportunity was there always needed was more capability to deliver well it played out just that way we did it to pass it for kidding and a drove result expansion came in the fall the last year and this past period was the third straight quarter of clear double digit growth in the critical industry

Standing with snap on brands of the critical industries, we've said in the past, but the opportunity was there always needed was more capability to deliver while it played out just that way we did at capacity for kidding and it drove results expansion came in the fall of last year and this past period was the third straight quarter of clear double digit growth in our critical.

Nicholas Pinchuk: There's turbulence in China. And the weakening of currencies are these days are impacting particular countries. But overall, the critical industries are robust, offering out significant potential for taking an advantage and making significant gains. And in the quarter, we did just that.

Industry.

And that was with strong margins.

Speaker 5: gangbusters gangbusters margins gangbusters growing it overcame the c&i challenge and you're Eastern Europe and Asia and we believe we have much more room to run in the critical in the critical industries arena so we're adding more capability in that business right now to pay full advantage

Gangbusters gangbusters margins gangbusters growth it overcame the C&I challenge.

And your Eastern Europe , and Asia, and we believe we have much more room to run in the critical in the critical industries Arena. So we're adding more capability in that business right now to take full advantage.

Nicholas Pinchuk: So our markets are resilient and are on a positive trajectory. And we believe that our runways for growth will present clear and abundant opportunities as we move forward. Enhancing the franchise network, expanding where a pair of shop owners and managers, extending to those critical industries, and building in emerging markets, rising by leveraging and going forward by leveraging our broadening product line, wielding our strengthening brand and deploying the increasing understanding of the work that is the whole mark of the snap on the Team.

Speaker 5: Well, that's the United. Substantial challenges overcome by strong products and expanded capacity to drive upward in the critical industries, and there's more to come.

Well, that's C&I substantial challenges overcome by strong products and expanded capacity to drive upward into critical industries and theres more to come.

Speaker 5: Now onto the tools group. Sales line was up organically 3.7% over last year, reaching 515.4 million in the quarter that finished with great, in a quarter that finished with great momentum. And the groups operating income continue to move strong.

Now onto the tools group sales volume was up organically three 7% over last year, reaching $515 4 million in the quarter that finished with great quarter that finished with great momentum and the group's operating income continue to move strongly upward.

Nicholas Pinchuk: That's the markets. Now, let's turn to the segments. In the CNI Group, third quarter sales reached 266.4 million, up 9.6 million, which includes 1.6 million and unethical currency effects, and an organic sales growth of 3.2 percent of the last year. From an earnings perspective, CNI's operating income was 58.1 million, up 11.1 percent, double digits, including[inaudible] Well, that's CNI, substantial challenges, overcome by strong products and expanded capacity to drive upward in the critical industries and there's more to come.

Speaker 5: Upward to 113.4 million and 11% increase, double did an increase over over 2022 levels. Another in a series of those double did increases for the tools group. And the operating margin, well it was 22% up 140 basis points from last year and that rise and that considerable rise was achieved overcoming 50 basis points of unfavorable currency.

$113 4 million, an 11% increase double digit increase over 2022 levels. Another in a series of those double digit increases for the tools group and the operating margin well. It was 22% up 140 basis points from last year and that rise in a considerable rise was achieved overcoming.

50 basis points of unfavorable currency baffled.

Speaker 5: a great quarter for them property, property, and growth. Now...

A great quarter for them properly.

The ability and growth right now.

Now.

Speaker 5: The third quarter is when we hold our annual Snap-on franchise e-conference. Are we called with the SSF?

The third quarter is when we hold our annual <unk>.

Snap on franchisee conference or we call it the SFC.

Speaker 5: This year the event was a natural with 9,000 people attending, franchisees, guests, and of course, the SNAP on team, all participating in a weekend of special, in a great weekend. It was a weekend of special training, hands-on encounters with our massive product line. And for some fun, for some fun, special SNAP on celebrations, you're really good. The attendees had the opportunity to spend time watering directly from the tool, expoll floor, and I'm happy to say orders were up again.

This year the event was a natural with 9000 people attending franchisees guests and of course, the snap on team all participating in the in the end and a weekend of specialty and a great weekend. It was a weekend of special training hands on e-commerce with our massive product line and for some front for some <unk>.

Of course, some fun special snap on celebrations through really good the attendees had the opportunity to spend time ordering directly from the tool.

Export floor and I am happy to say orders were up again this.

Speaker 5: this year, and that expo span the space of over three foot ball fields where our entire portfolio products was on display. But it had a wide array of demonstrations that were specially designed to showcase the snap on performance advantage.

This year, which are there in that and.

And that export spanned a space of over three football fields, where our entire portfolio of products was was on display but it had a wide array of demonstrations that.

That was especially designed to showcase the snap on performance you had a performance advantage. The conference also provided a number of training sessions, helping franchisees to expand their business seminars and special breakout highlighting our product features and unique advantages in critical categories like power tools and diagnostics.

Speaker 5: The conference also provided a number of training sessions, helping franchisees expand their business, seminars, and special breakouts, highlighting our product features and unique advantages in critical categories like power tools and diagnostics.

Speaker 5: and we topped off that multi-day event. This is the video to celebration with an honor of a mod of coach buses, transporting the team to downtown Nashville for unique snap-on evening. Boom Chakalaka was the word of the day, was another memorable SSC, insightful education, great new product, and the special fellowship. Thank you.

And we topped off that multi day events.

These are the celebration with another model of coach buses transporting the team downtown Nashville for unique snap on evening wound Jackup <unk> was the word of the day. It was another memorable SSC insightful education, great new products and the special Fellowship a.

A special fellowship that reinforces our unique bond with our franchisees from my perspective, our van drivers at Nashville spoke enthusiastically about their current business businesses and radiated firm confidence in their future with snap on.

Speaker 5: that reinforces our unique bond with our franchisees. From my perspective, our van drivers at Nashville spoke enthusiastically about their current business, businesses, and radiated firm components in their future with Snap-On. And if you were there, you would have seen it.

And if you were there you would have seen it too.

Speaker 5: During the two-lex Expo, franchises were able to spend time interacting with some of the new innovative products derived from our customer connections, insight gained directly in the workplace. Hantles were big at the SFC in the quarter, and the demand was driven by special new products like our 12-millimeter 6.0-liter, Dura Max, Glowplug Stock.

During the two electrical Expo franchisees were able to spend time interacting with some of the new innovative products derived from our customer connections insight gained directly in the workplace hand tools were big at the SFC and in the quarter and the demand was driven by specialty products like our 12 millimeters 6.6 liter duramax glow plug socket.

Speaker 5: This product was inspired by a franchisee observing the technicians removing blocking components one by one from a diesel vehicle, fender wheel, especially in take lines and steering shifts.

This product was inspired by a franchisee observing the technician's removing blocking components one by one from a diesel beat from a diesel vehicle Thunderbolt special intake lines steering shifts.

Speaker 5: These items create access barriers, increasing the difficulty of executing the very basic repair of just changing diesel glow plugs. A routine test that was made difficult because of a crowded engine compartment designed with minimal regard for servicing. We listened to the franchisee feedback, went to work, designed-use, and designed a new sock.

These items create access there is increasing the difficulty of executing the very basic repair of just changing diesel glow plugs a routine test that was made difficult because of a crowded engine compartment designed with minimal regard for servicing we listen to the franchisee feedback went to work designed use and design of new songs.

Speaker 5: longer than the standard to reach the glow plugs from a distance. And with a flex mechanism, the guide around the blockers, making it unnecessary to remove them. Technicians immediately recognize the considerable time savings that, and it made the new cycle very popular. It's another customer connection that transformed a laborious process, making work easier, freeing up time, and increasing tech capacity. And therefore, tech...

<unk>.

Longer than the standard to reach the glow plugs from a distance and with a flex flex mechanism to guide around the blockers, making it making it unnecessary to remove them technicians immediately recognize the considerable time savings that and it made the new second very popular it's another customer connection that tranche.

Formed a laborious process, making work easier freeing up time, and increasing capacity and therefore tech income.

Speaker 5: Also on display it was another example of customer connection the new FHC 72 MPRR These product Terminations are a mouthful, huh? Triple but it's a we call it a triple function rack

Also on display was another example of customer connection the new FHFA 72, MPR, our visa product terminations are a mouthful triples.

Nicholas Pinchuk: Now on to the tools group. Sales line was up organically 3.7% over last year reaching 515.4 million in the quarter that finished with great momentum and the groups operating income continue to move strongly upward to 113.4 million. And 11% increased, double did an increase over 222 levels, another in a series of those double digits increases for the tools group. And the operating margin, well it was 22% up 140 basis points from last year and that rise and considerable rise was achieved overcoming 50 basis points of unfavorable currency.

We call it a triple function ratchet three tools in one again born out of customer connection directly in the workplace first the ratchet that can be secure parallel to the handle serving as in the traditional ratchet next the head can be adjusted to take any one of 16 available positions 240 degrees around the handle centerline, enabling the tool to.

Speaker 5: Three tools in one. Again, born out of customer connection directly in the workplace. First, the ratchet can be secured parallel to the handle, serving as a traditional ratchet. Next, the head can be adjusted to take any one of 16 available positions, 240 degrees around the handle center line, enabling the tool to work while reaching around obstacles. Finally, the unit can be placed in a free spin mode, providing the tech with 30 to 60 degrees and continuous rotation greatly reducing work time and low torque situation.

Work, while reaching around obstacles finally, the unit can be placed in a free spin mode, providing the tech with 360 degrees of continuous rotation greatly reducing work kind of in low torque situations our customers. The technicians again saw the great benefit of that improve productivity and that recognition made the triple triple function Ratchet a million.

Speaker 5: our customers, the technicians, again, so are the great ran-infit of that improved productivity. And that recognition made the triple function ratchet a million dollar hit product in just the first month of selling.

Nicholas Pinchuk: Now the third quarter is when we hold our annual Snap-On franchisee conference or we call it the FFC. This year the event was a national with 9,000 people attending, franchisee's guests and of course Snap-On team all participating in a weekend of special in a great weekend. It was a weekend of special training hands-on encounters with our massive product line and for some front, for some fun, special Snap-On celebrations. They were really good.

His products in just the first month of selling.

Speaker 5: was another win for customer connection and a driver for the tools group. The tools group...

It was another win for customer connection and a driver for the tools group the tools group.

Speaker 5: Group's third quarter, achievement and momentum, fueled by customer connection, innovative insight, anchoring great new products. And with the Group's continuous dedication to Snap-On Value Creation, we believe the hits in the progress will just keep on coming.

Groups third quarter achievement, and a momentum fueled by customer connection innovative insight anchoring great new great new products and with the group's continuous dedication of snap on value creation, we believe the hits in the progress, we'll just keep on coming.

Nicholas Pinchuk: The attendees had the opportunity to spend time ordering directly from the tool. Expo floor and I'm happy to say orders were up again this year. And that expo span the space of over 3 football fields where our entire portfolio products was on display but it had a wide array of demonstrations that were specially designed to showcase the Snap-On performance advantage. The conference also provided a number of training sessions, helping franchisees to expand their business seminars and special breakouts, highlighting our product features and unique advantages and critical categories like power tools and diagnostics.

Speaker 5: Turning to RSNI. Sales at 43.8, 431.8 million in a third quarter were up as reported by 4.2% with an organic improvement of 3.1%. Expansions in the undercar equipment and our diagnostic and information portfolio will continue to offset the OEM businesses where which finished down slightly in a traditionally lumpy arena.

Turning to <unk> sales of 43, eight $431 8 million in the third quarter were up.

As reported by four 2% with organic improvement of three 1% expansion in the under car equipment in our diagnostics and information portfolio continued to offset the.

The OEM businesses, where which finished down slightly in the traditionally lumpy lumpy arena.

Speaker 5: O1I for R and I was 104.9 million, up 10% again, double digits from 2022. And the operating margins of was 24.3% which represented an improvement of 130 basis points. Again, against 20 basis points of unfavorable foreign current.

Oh, why for Arts, and I was $104 9 million up 10% again double digits from 2022, and the operating margin was 24, 3% referenced which which represented an improvement of 130 basis points again against 20 basis points of unfavorable foreign currency.

Nicholas Pinchuk: And we topped off that multi-day event. These are the celebration with an amount of coach buses transporting the team to downtown Nashville for unique Snap-On evening. Boom Chakalaka was the word of the day was another memorable SSE and insightful education, great new product and a special fellowship, a special fellowship that reinforces our unique bond with our franchisees. From my perspective, our van drivers at Nashville spoke enthusiastically about their current businesses and radiated firm components in their future with Snap-On.

Speaker 5: We have breed confidence in our RSI business. Our customers and industry partners feel the same.

We have great confidence in our resi business, our customers in energy and industrial and industry partners feel the same and that confidence was demonstrated in our latest public recognition recently motor magazine chose our Zeus plus fast track intelligent diagnostic platform as a top tool in 2023.

Speaker 5: And that confidence was demonstrated in the latest public recognition. Recently, Motor Magazine chose our Zeus Plus Fast Track and Telgestagnostic platform as a top tool in 2023.

Speaker 5: Our premium hand-held unit was recognized for simplifying the repairs, guiding technicians through the troubleshooting procedures, avoiding unnecessary steps along the way, and improving solution accuracy, and most importantly, reducing the time to identify the proper fit.

Our premium handheld unit was recognized for simplifying the repairs guiding technicians through the troubleshooting procedures, avoiding unnecessary steps, along the way and improving solution accuracy and most importantly, reducing the time to identify the proper fix that.

Nicholas Pinchuk: And if you were there, you would have seen it too. During the tool Expo, franchisees were able to spend time interacting with some of the new innovative products derived from our customer connections, insight gained directly in the workplace. Hand tools were big at the SSE and in the quarter and the demand was driven by special new products like our 12-millimeter 6.0-liter Duramax Glowplug socket. This product was inspired by a franchisee observing the technicians removing blocking components one by one from a diesel vehicle, fender wool, special intake lines and steering shifts.

Speaker 5: The Zeus Plus is the top of the line for vehicle repair and the publications know it. Recognizing our handhelds, new prominent bright screen, increasing the ease of use in direct sunlight. It's faster processor with more onboard memory, enabling greater task efficiency, and it's improved lab scope, making component testing much more active.

The Zeus plus is the top of the line for vehicle repair and the publications Noah's recognizing our handhelds are handheld new prominent bright screen, increasing the ease of use in direct sunlight its faster processor with more onboard memory and enabling greater task efficiency and its improved lab scope.

<unk> component testing much more accurate.

Speaker 4: And when professional tools and equipment news, they asked its readers to choose the best new tools, that's recipients of that publication's People's Choice Awards, the tech selected seven SNAP on products led by the Zoos Plus. The Zoos Plus.

And with professional tools and equipment news fastest readers to choose the best new tools as recipients of that publication's People's Choice Awards. The text selected seven snap on products led by the Zeus plus.

Nicholas Pinchuk: These items create access barriers, increasing the difficulty of executing the very basic repair of just changing diesel glow plugs. A routine test that was made difficult because of a crowded engine compartment designed with minimal regard for servicing. We listened to the franchisee feedback, went to work, designed use and designed a new socket. It, longer than the standard to reach the glow plugs from a distance, and with a flex mechanism, the guide around the blockers, making it unnecessary to remove them.

The Zeus plus top of the line.

Speaker 5: hardware, software, shape, white customer connection. Another in a long line of distinctive and decisive RF and I product driving the group upward and on.

Hardware software shaped by customer connection another in a long line of distinctive and decisive our F&I products driving the group upward and onward.

Speaker 4: We're quite positive about the arsonized possibilities with repair shop owners and managers as the vehicle industry evolves and the quarters supports that component. So those are the high,

We're quite positive.

Positive about the arsenide possibilities with repair shop owners and managers as the vehicle industry evolves in the quarter supports that confidence.

Nicholas Pinchuk: Technicians immediately recognized the considerable time savings, and it made the new cycle very popular. It's another customer connection that transformed the laborious process, making work easier, freeing up time and increasing tech capacity, and therefore tech income. Also on display, it was another example of customer connection, the new FHC 72MPRR, these product terminations are a mouthful, but we call it a triple function ratchet, three tools in one, again, born out of customer connection directly in the workplace, first the ratchet can be secured parallel to the handle, serving as a traditional ratchet.

So those are the highlights of the quarter.

Continued strong progress.

Speaker 5: the 13th straight quarter above pre-pandemic levels. C and I, margins, margins, up, year over year volume growth, and strong, strong OI margin.

The 13th straight quarter above pre pandemic levels C&I margins margins up year over year volume growth and strong strong Oi margins the tools group, great products competent franchisees and strong momentum.

Speaker 5: The tools group, great products, confident franchise these, and strong moments.

Nicholas Pinchuk: Next, the head can be adjusted to take any one of 16 available positions, 240 degrees around the handle center line, enabling the tool to work while reaching around obstacles. Finally, the unit can be placed in a free spin mode, providing the tech with 360 degrees and continuous rotation, greatly reducing work time and low torque situations. Our customers, the technicians, again, so are the great ran-in-fit of that improved productivity and that recognition made the triple function ratchet a million-dollar hit product in just the first month of selling.

Speaker 5: RS and I, undercar and repair information activity, leading the charge, enabling the repair shops and the challenges today's vehicles. And the overall corporation sales up 5.2% as reported, 4.7% organically, off-go operating margin 21.2% up 90 basis points, overcoming 50 basis points of currency headwind, and an EPS of $4.51, rising 8.9% versus last year. It was an increase.

Our F&I under car repair information activity, leading the charge, enabling the repair shops and the challenges of today's vehicles and the overall corporation sales up five 2% as reported four point something percent organically Opco operating margin of 21, 2% up 90 basis points, overcoming 50 basis points of currency headwind.

And an EPS of $4 51.

Rising eight 9% versus last year.

Was an encouraging quarter.

Speaker 6: Now I'll turn the call over to Aldo. Aldo. Thanks Nick, our consolidated operating results are summarized on flight six.

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

Our consolidated operating results are summarized on slide six.

Speaker 6: that sales of $1,159.3 million in the quarter represented and increased at 5.2% from 2022 levels, reflecting a 4.7% organic sales gain and $4.4 million of favorable for currency translation. Organic sales goes as balanced across all three of our operating segments. And from a geographic perspective, we experienced your over-year gains in North and South America as well as you.

Net sales of $1 billion $159 $3 million in the quarter represented an increase of five 2% from 2022 levels, reflecting a four 7% organic sales gain and $4 $4 billion of favorable foreign currency translation organic sales growth was balanced across all three of our operating segments from a geographic purse.

Nicholas Pinchuk: It was another win for customer connection and a driver for the tools group. The tools group's third quarter achievement and momentum, fueled by customer connection, innovative insight, anchoring great new products. And with the group's continuous dedication to snap-on-value creation, we believe the hits in the progress will just keep on coming.

We experienced year over year gains in North and South America as well as Europe .

Speaker 6: Asia continue to be attenuated by weakness in China and Japan, the latter hampered by a depreciating

Asia continued to be attenuated by weakness in China, and Japan, but weather hampered by a depreciating yet.

Speaker 6: Consolidated gross margin improved 150 basis points to 49.9% from 48.3% last year, as gross margins expanded across all of our operating segments. Contributions from increased sales volume with pricing actions, lower material and other costs and benefits for the company's RCI initiatives were partially offset by 50 basis points of unfavorable foreign currency effects.

Consolidated gross margin improved 160 basis points to 49, 9% from 48, 3% last year as gross margins expanded across all of our operating segments contributions from increased sales volume with pricing actions lower material and other costs and benefits from the company's RCI initiatives were partially offset.

Nicholas Pinchuk: Turning to RSNI, sales of 43.8, 431.8 million in a third quarter were up as reported by 4.2% with an organic improvement of 3.1% expansions in the undercar equipment and our diagnostics and information portfolio continued to offset the OEM businesses which finished down slightly in a traditionally lumpy arena. OEM I for RSNI was 104.9 million, up 10% again, double digits from 2022, and the operating margins of was 24.3% which represented an improvement of 130 basis points, again, against 20 basis points of unfavorable forward currency.

By 50 basis points of unfavorable foreign currency effects.

Speaker 6: operating expenses as a percentage of that sales rose 70 basis points to 28.7% from 28% last year, primarily due to increased investment in personnel and other costs.

Operating expenses as a percentage of net sales rose 70 basis points to 28, 7% from 28% last year, primarily due to increased investment in personnel and other costs.

Speaker 6: operating earnings before financial services of $245.2 million in the quarter compared to $223.5 million in 2022. As a percentage of net sales operating margin before financial services of 21.2% including 50 basis points of unfavorable currency effects reflects an expansion of 90 basis points over last.

Operating earnings before financial services of $245 $2 billion in the quarter compared to $223 $5 million in 2022 as a percentage of net sales operating margin before financial services of 21, 2%, including 50 basis points of unfavorable currency effects reflects an expansion of 90 basis points over last year.

Nicholas Pinchuk: We have great confidence in our RSNI business. Our customers and industry partners feel the same. And that confidence was demonstrated in the latest public recognition. Recently, Motor Magazine chose our Zeus Plus Fast Track Intelligence Diagnostic Platform as a top tool in 2023. Our premium handheld unit was recognized for simplifying the repairs, guiding technicians through the troubleshooting procedures, avoiding unnecessary steps along the way and improving solution accuracy, and most importantly, reducing the time to identify the proper fits.

Speaker 6: Financial Services revenue of $94.9 million in the third quarter of 2023 compared to $87.3 million last year. While operating hearings of $69.4 million compared to $66.4 million in 2022.

Financial services revenue of $94 $9 billion in the third quarter of 2023 compared to $87 $3 million last year, while operating earnings of $69 4 billion compared to $66 $4 million in 2022.

Speaker 6: Solid data operating earnings of 314.6 million dollars in the quarter compared to 289.9 million dollars last

Consolidated operating earnings of $314 $6 million in the quarter compared to $289 $9 million last year.

Speaker 6: As a percentage of revenues, the operating earnings margin of 25.1%, reflects an improvement of 70 basis points from 2022.

As a percentage of revenues the operating earnings margin of 25, 1% reflects an improvement of 70 basis points from 2022 or.

Nicholas Pinchuk: The Zeus Plus is the top of the line for vehicle repair and the publications know it, recognizing our handheld's new prominent bright screen, increasing the ease of use in direct sunlight. Its faster processor with more onboard memory, enabling greater task efficiency, and its improved lab scope, making component testing much more active, and when professional tools and equipment news ask this reader to choose the best new tools as recipients of that publication's People's Choice Awards, the tech selected seven Snap-On products led by the Zoos Plus, the Zoos Plus top of the line indeed, hardware, software, shaped by customer connection, another in a long line of distinctive and decisive RF and I products driving the group upward and outward.

Speaker 6: Our third quarter effective income tax rate of 22.6% compared to 21.6% last.

Our third quarter effective income tax rate of 22, 6% compared to 21, 6% last year.

Speaker 6: Net earnings of $243.1 million or $4.51 for diluted share, including an 8 cent per share impact from unfavorable foreign currency. Reflected an increase of 19.2 million dollars with 37 cents per share from 2022 levels and represented an 8.9% year-over-year improvement in diluted earnings per share.

Net earnings of $243 $1 billion of $4 51 per diluted share, including eight cents per share impact from unfavorable foreign currency.

Reflected an increase of $19 $2 million 37 per share from 2022 levels and represented an eight 9% year over year improvement in diluted earnings per share now.

Speaker 6: Now let's turn to our segment results for the quarter. Starting with C and I group on side seven.

Now, let's turn to our segment results for the quarter, starting with C&I group on slide seven.

Speaker 6: Sales, $356.4 million increased from $356.8 million last year, reflecting an $11.2 million or 3.2% organic sales game, which was partially upset by $1.6 million of unfavorable foreign currency translation.

Sales of $366 4 billion increased from $356 $8 million last year, reflecting an $11 2 million or three 2% organic sales gain which was partially offset by $1 6 million of unfavorable foreign currency translation.

Nicholas Pinchuk: We're quite positive about the authorized possibilities with repair shop owners and managers as the vehicle industry evolves and the quarters supports that component. So those are the highlights of the quarter. Continued strong progress, the 13th straight quarter above pre-pandemic levels, CNI, margins, up, year over year volume growth and strong, strong OI margins, the tools group, great products, confident franchisees and strong momentum. RS and I, under car repair information activity, leading the charge, enabling the repair shops and the challenges today's vehicles and the overall corporation, sales up 5.2% as reported, 4.7% organically. Op-go operating margin 21.2% up 90 basis points, overcoming 50 basis points of currency, headwind and an EPS of $4.51, rising 8.9% versus last year. It was an encouraging quarter.

Speaker 6: Organic growth includes a double digit gain in sales to customers in critical industries, partially offset by a double digit decline in the segmentation-specific operation.

Organic growth includes a double digit gain in sales to customers in critical industries, partially offset by a double digit decline in the segment's Asia Pacific operations with respect to critical industries sales to the military were robust as was activity in the aviation sector.

Speaker 6: With respect to critical industries, sales to the military were robust, as was activity in the aviation sector.

Speaker 6: Overall, C&I Organic Sales to external customers were up 7.1% for the court.

Overall, C&I organic sales to external customers were up seven 1% for the quarter.

Speaker 6: Gross margin improved 210 basis points at 39% in the third quarter from 36.9% in 2022. This was largely due to increased sales volumes in the higher gross margin critical industry sector, pricing actions, and benefits from RCI Edition.

Gross margin improved 210 basis points to 39% in the third quarter from 36, 9% in 2022.

This was largely due to increased sales volumes and the higher gross margin critical industry sector pricing actions and benefits from RCI initiatives.

Speaker 6: These improvements were partially offset by 60 basis points of unfavorable foreign currency effect.

These improvements were partially offset by 60 basis points of unfavorable foreign currency effects.

Speaker 6: operating expenses is a percentage of sales, rose 90 basis points to 23.1% in the quarter, from 22.2% to 2022, primarily due to increased sales and higher expense businesses, and investments in personnel and other costs.

Operating expenses as a percentage of sales rose 90 basis points to 23, 1% in the quarter from 22, 2% in 2022, primarily due to increased sales and higher expense businesses and.

Investments in personnel and other costs.

Aldo Pagliari: Now I'll turn the call over to Aldo. Thanks Nick.

Speaker 6: Operating earnings for the C&I segment of $58.1 billion, including $2.9 billion of unfavorable foreign currency effects, compared to $52.3 billion last year.

Operating earnings for the C&I segment of $58 1 billion, including $2 9 million of unfavorable foreign currency effects compared to $52 $3 million last year.

Aldo Pagliari: Our consolidated operating results are summarized on slide six. Met sales of $1,159.3 million in the quarter represented an increase of 5.2% from 2022 levels, reflecting a 4.7% organic sales gain and $4.4 million of favorable for currency translation. Organic sales goes as balanced across all three of our operating segments. And from a geographic perspective, we experienced year over year gains in North and South America as well as Europe. Asia continued to be attenuated by weakness in China and Japan, the latter hampered by its appreciating yen.

Speaker 6: The operating margin of 15.9%, including 70 basis points of unfavorable currency effects, compared to 14.7% in 2022, reflecting an improvement of 120 basis points.

The operating margin of 15, 9%, including 70 basis points of unfavorable currency effects compared to 14, 7% in 2022, reflecting an improvement of 140 basis points.

Turning to slide eight.

Speaker 6: Sales and the Snap-on-Tools Group of $515.4 million compared to $496.6 million a year ago. Reflecting a 3.7% organic sales gain and $500,000 of favorable foreign currency translation. The organic sales growth reflects a double digit gain in our international operations and a low single digit increase in our US business. Of course, margin improved 140 basis points to the 46.3% in the quarter from 44.9% last year.

Sales in the snap on tools group of $515 4 million compared to $496 6 million a year ago, reflecting a three.

Three 7% organic sales gain and $500000 of favorable foreign currency translation.

Aldo Pagliari: Consolidated gross margin improved 150 basis points to 49.9% from 48.3% last year, as gross margins expanded across all of our operating segments. Contributions from increased sales volume with pricing actions, lower material and other costs and benefits to the company's RCI initiatives were partially offset by 50 basis points of $1.2 million. Operating expenses as a percentage of net sales rose 70 basis points to 28.7% from 28% last year, primarily due to increased investment in personnel and other costs.

<unk> sales growth reflects a double digit gain in our international operations and a low single digit increase in our U S business gross.

Gross margin improved 140 basis points to 46, 3% in the quarter from 44, 9% last year.

Speaker 6: This increases primarily due to the higher sales volumes and pricing actions and benefits from RCI initiatives partially offset by 50 basis points of unfavorable foreign currency effect.

This increase was primarily due to higher sales volumes and pricing actions and benefits from RCI initiatives, partially offset by 50 basis points of unfavorable foreign currency effects.

Speaker 6: Operating expenses as a percentage of sales was unchanged from last year with benefits from higher volumes offset by increased personnel and other costs

Operating expenses as a percentage of sales was unchanged from last year with benefits from higher volumes offset by increased personnel and other costs.

Aldo Pagliari: Operating earnings before financial services of $245.2 million in the quarter compared to $223.5 million in 2022 as a percentage of net sales operating margin before financial services of 21.2% including 50 basis points of unfavorable currency effects reflects an expansion of 90 basis points over last year. Financial services revenue of $94.9 million in the third quarter of 2023 compared to $87.3 million last year, while operating earnings of $69.4 million compared to $66.4 million in 2022.

Speaker 6: Operating earnings for the Snap-on Tools Group of $113.4 million, including $2.7 million of unfavorable foreign currency effects compared to $102.2 million last month.

Operating earnings for the snap on tools group of $113 $4 billion, including $2 7 million of unfavorable foreign currency effects compared to $102 $2 million last year.

Speaker 6: The operating margin of 22% includes 50 basis points of unfavorable accuracy compared to 20.6% in 2022, reflecting an improvement of 140 basis points.

The operating margin of 22% includes 50 basis points of unfavorable currency compared to 26% in 2022, reflecting.

An improvement of 140 basis points.

Turning to the <unk> group shown on slide nine.

Speaker 6: sales of $431.8 million compared to $414 million in 2022, reflecting a 3.1% organic sales gain and $4.8 million of favorable foreign currency translation. The organic sales increase includes a high single-digit gain in sales of undercar equipment and a low single-digit increase in sales of diagnostic and repair information products to independent shop owners and managers.

Sales of 440, $431 8 million compared to $414 million in 2022, reflecting a three 1% organic sales gain of $4 $8 million of favorable foreign currency translation.

Aldo Pagliari: It's all data operating earnings of 314.6 million dollars in the quarter compared to 289.9 million dollars last year. As a percentage of revenues, the operating earnings margin of 25.1% reflects an improvement of 70 basis points from 2022. Our third quarter effective income tax rate of 22.6% compared to 21.6% last year. Net earnings of 243.1 million dollars of $4.51 for diluted share, including an 8 cent per share impact from unfavorable foreign currency. Reflected an increase of 19.2 million dollars of 37 cents per share from 2022 levels and represented an 8.9% year-over-year improvement in diluted earnings per share.

<unk> sales increase includes a high single digit gain in sales of under car equipment and a low single digit increase in sales of diagnostic and repair information products to independent shop owners and managers.

Speaker 6: These gains were partially offset by a low single-digit decline in activity with OEM dealerships, where we often see variability in essential tool programs from period to period.

These gains were partially offset by a low single digit decline in activity with OEM dealerships, where we often see variability and essential tool programs from period to period.

Speaker 6: Gross margin improved 260 basis points to 45.5% from 42.9% last year, mostly due to lower material and other costs, increased sales volumes, and savings from RCI initiatives.

Gross margin improved 260 basis points to 45, 5% from 42, 9% last year, mostly due to lower material and other costs increased sales volumes and savings from RCI initiatives.

Aldo Pagliari: Now let's turn to our segment results for the quarter.

Speaker 6: operating expenses as a percentage of sales went up by 130 basis points to 21.2% from 19.9% last year, primarily reflecting increased personnel in other costs.

Operating expenses as a percentage of sales went up by 130 basis points to 21, 2% from 19, 9% last year.

Aldo Pagliari: Starting with CNI Group on slide 7. Sales of $356.4 million increased from $356.8 million last year, reflecting an $11.2 million or 3.2% organic sales gain, which was partially offset by $1.6 million of unfavorable foreign currency translation. Organic growth includes a double digit gain in sales to customers in critical industries, partially offset by a double digit decline in the segmented Asia-Pacific operations. With respect to critical industries, sales to the military were robust as was activity in the aviation sector.

Barely reflecting increased personnel and other costs.

Speaker 6: Operating earnings for the RS&I group of $104.9 million compared to $95.4 million last year. The operating margin improved 130 basis points to 24.3% from 23% reported last year.

Operating earnings for the <unk> group of $104 9 million compared to $95 $4 million last year. The operating margin improved 130 basis points to 24, 3% from 23% reported last year.

Now turning to slide 10.

Speaker 6: Revenue from financial services increased $7.6 million to $94.9 million from $87.3 million last year. Primarily reflecting the growth of the low-

Revenue from financial services increased $7 6 million to $94 9 million from $87 3 million last year, primarily.

Reflecting the growth of the loan portfolio.

Aldo Pagliari: Overall, CNI organic sales to external customers were up 7.1% for the quarter. Growth margin improved 210 basis points at 39% in the third quarter from 36.9% in 2022. This was largely due to increased sales volumes in the higher growth margin critical industry sector, pricing actions, and benefits from RCI initiatives. These improvements were partially offset by 60 basis points of unfavorable foreign currency effects. Operating expenses is a percentage of sales rose 90 basis points to 23.1% in the quarter from 22.2% in 2022, primarily due to increased sales in higher expense businesses and investments in personnel and other costs.

Speaker 6: financial services operating earnings of $69.4 million compared to $66.4 million in 2022.

Financial services operating earnings of $69 $4 billion compared to $66 4 million in 2022.

Speaker 6: Financial services expenses were up 4.6 million from 2022 levels, including $4 million of higher provision for credit loss.

Financial services expenses were up $4 6 million from 2022 levels, including $4 million of higher provision for credit losses the.

Speaker 6: The year-over-year increase in provisions reflects both the growth of the portfolio, as well as a return to what we believe to be a more normal pre-pandemic rate of provision.

The year over year increase in provisions reflects both the growth of the portfolio as well as a return to what we believe to be a more normal pre pandemic ready to provision.

Speaker 6: Sequentially, the provision for Quentin Laws' decrease to buy about $500,000.

Sequentially the provision for credit losses decreased by about $500000 per.

Speaker 6: For reference, a gross worldwide extended credit or finance receivable portfolio has increased 9.3% year-over-year.

For reference our gross worldwide extended credit or finance receivable portfolio has increased nine 3% year over year and.

Speaker 6: We believe that the link with the end portfolio for performance trends currently remains stable.

And we believe the delinquency and portfolio performance trends currently remains stable.

Aldo Pagliari: Operating earnings for the CNI segment are 58.1 million including 2.9 million of unfavorable foreign currency effects compared to $52.3 million last year. Operating margin of 15.9% including 70 basis points of unfavorable foreign currency effects compared to 14.7% in 2022, reflecting an improvement of 120 basis points.

Speaker 6: And both the third quarter of 2023 and 2022, the respective average yield on finance receivables was 17.7%. And the third quarter of 2023 and 2022, average yields on contract receivables were 8.8%, and 8.6% respect.

Both the third quarters of 2023 and 2022, the respective average yield on finance receivables was 17, 7% in the third quarters of 2023, and 2022 average yield on contract receivables were eight 8% and eight 6% respectively.

Total loan originations of $305 2 million in the third quarter represented an increase of $5 million or one 7% from 2022 levels, including a 4% increase in originations of finance receivables.

Speaker 6: Total loan originations of $305.2 million in the third quarter represented an increase of $5 million or 1.7% from 2022 levels, including a 4% increase in originations of finance receivables.

Aldo Pagliari: Turning now to slide 8. Sales in the Snap-on-Tools group of $515.4 million compared to $496.6 million a year ago reflecting a 3.7% organic sales gain and $500,000 of favorable foreign currency translation. Organic sales growth reflects a double digit gain in our international operations and a low single digit increase in our U.S, business.

Moving to slide 11.

Speaker 6: Our quarter and balance sheet includes approximately $2.4 billion of gross financing receivables with 2.1 billion from our U.S. operations.

Our quarter end balance sheet includes approximately $2 4 billion of gross financing receivables with $2 1 billion from our U S. Operation. The 60 day, plus delinquency rate of one 5% for U S. Extended credit is the same as it was in this period last year on a sequential basis. The rate is up 20 basis points, reflecting the seasonal.

Speaker 6: The 60-day plus delinquency rate of 1.5% for US extended credit is the same as it was in this period last year. On a sequential basis, the rate is up 20 basis points reflecting the seasonal trend we typically experience in the third quarter.

Aldo Pagliari: Gross margin improved 140 basis points to 46.3% in the quarter from 44.9% last year. This increases primarily due to higher sales volumes and pricing actions and benefits from RCI initiatives partially offset by 50 basis points of unfavorable foreign currency effects.

And we typically experienced in the third quarter.

Speaker 6: As it relates to extended credit or finance receivables, a trailing 12-month net loss is a 47.9 million represented 2.51% of outstanding record rent, which is up slightly from the 2.45% reported at the end of last quarter. Now it turns to slide 12.

As it relates to extended credit or finance receivables trailing 12 month net losses of $47 9 million represented $2 five 1% of Outstandings at quarter end, which is up slightly from the $2 four 5% reported at the end of last quarter now turning to slide 12.

Aldo Pagliari: Operating expenses as a percentage of sales was unchanged from last year with benefits from higher volumes offset by increased personnel and other costs, operating earnings for the Snap-On tools group of $113.4 million including $2.7 million of unfavorable foreign currency effects compared to $102.2 million last year. The operating margin of 22% includes 50 basis points of unfavorable currency compared to 20.6% in 2022 reflecting an improvement of 140 basis points.

Speaker 6: Cash provided by operating activities of $285.4 million in the quarter represented 115% of net earnings. In compared to $129.9 million last.

Cash provided by operating activities of $285 $4 million in the quarter represented 115% of net earnings and compared to $129 $9 million last year.

Speaker 6: The improvement is compared to the third quarter of 2022, largely reflects lower year-over-year increases in working investment, as well as higher net earnings.

The improvement as compared to the third quarter of 2022, largely reflects lower year over year increases in working investment as well.

Well as higher net earnings.

Aldo Pagliari: According to the RS and I group, Sean and Slide 9, sales of $441.8 million compared to $414 million in 2022 reflecting a 3.1% organic sales gain and $4.8 million of favorable foreign currency translation. The organic sales increase includes a high single-digit gain in sales of undercar equipment and a low single-digit increase in sales of diagnostic and repair information to independent shop owners and managers. These gains were partially offset by a low single-digit decline in activity with ODM dealerships where we often see variability in essential tool programs from period to period.

Speaker 6: Netcash used by investing activities of $59.7 million, including net additions to finance receivables of $35.1 million, and capital expenditures of $25.

Net cash used by investing activities of $59 7 million included net additions to finance receivables of $35 1 billion and capital expenditures of $25 1 billion.

Speaker 6: that cash used by financing activities of 135.3 million included cash dividends of $85.6 million and the repurchase of $194,000 shares of common stock for $51.8 million under our existing share repurchase program.

Net cash used by financing activities of $135 3 billion included cash dividends of $85 $6 million and the repurchase of 194000 shares of common stock for $51 $8 million under our existing share repurchase programs as.

Speaker 6: We have remaining availability to repurchase up to an additional $304.5 million of common stock under our existing authorizations.

As of quarter end, we had remaining availability to repurchase up to an additional $304 $5 billion of common stock under our existing authorizations turning to slide 13.

Speaker 6: Trade and other accounts received will increase $15.1 million from 2022 UN. This sales outstanding of 60 days compared to 61 days as of 2022 UN. Eventory has decreased $200,000 from 2022 UN.

Trade and other accounts receivable increased $15 $1 billion from 2022.

Aldo Pagliari: Gross margin improved 260 basis points to 45.5% from 42.9% last year, mostly due to lower material and other costs, increased sales volumes, and savings from RCI initiatives. Operating expenses as a percentage of sales went up by 130 basis points to 21.2% from 19.9% last year, primarily reflecting increased personnel and other costs. Operating earnings for the RS and I group of $104.9 million compared to $95.4 million last year, the operating margin improved 130 basis points to 24.3% from 23% report to last year.

Days sales outstanding of 60 days compared to 61 days as of 2022 year end inventories decreased $200000 from 2022 year end.

Speaker 6: Trailing 12-month basis, inventory turns to 2.4 compared to 2.5 year end 2022.

Trailing 12 month basis inventory turns of two four compared to $2 five at year end 2022.

Speaker 6: Our quarter end cash position of $959.3 million compared to $757.2 million at year end 2022.

Our quarter end cash position of $959 3 million.

Compared to $757 2 billion at year end 2022.

Speaker 6: Are net debt the capital ratio of 4.8% compared to 9% at year end 2020?

Our net debt to capital ratio of four 8% compared to 9% at year end 2022 and.

Speaker 6: In addition to cash and expected cash from operations, we entered into a five-year $900 million both die currency revolving credit facility on September 12, which amends and restates our previous $800 million.

In addition to cash and expected cash flow from operations, we entered into a five year $900 million multi currency revolving credit facility on September 12, which amends and restates our previous $800 million.

Aldo Pagliari: Now 30 to slide 10, revenue from financial services increased $7.6 million to $94.9 million from 87.3 million last year, primarily reflecting the growth of the low portfolio. Financial services operating earnings of $69.4 million compared to $66.4 million in 2022. Financial services expenses were up 4.6 million from 2022 levels, including $4 million of higher provision for credit losses. The year-over-year increase in provisions reflects both the growth of the portfolio as well as a return to what we believe to be a more normal pre-pandemic rate of provision.

Speaker 6: As a quarter end, there were no amounts outstanding under the credit facility, and there were no commercial paper borrowing substance.

As of quarter end, there were no amounts outstanding under the credit facility and there were no commercial paper borrowings outstanding.

Speaker 6: That concludes my remarks on our third quarter performance. And now briefly review a few of the items for the remainder of 2023. We anticipate the capital expenditure will approximate $100 million. In addition, we currently anticipate that our full year 2023 effective income tax rate will approximate 23%. And now turn the call back to Nick for his closing thoughts. Nick. Thanks, Alville. Wow.

That concludes my remarks on our third quarter performance I'll now briefly review a few outlook items for the remainder of 2023, we anticipate that capital expenditures will approximate $100 million. In addition, we currently anticipate that our full year 2023 effective income tax rate will approximate 23% of ill turn the call back to Nick for us.

His closing thoughts Nick.

Aldo Pagliari: Sequentially, the provision for credit losses decreased by about $500,000. For reference, our gross worldwide extended credit or financial receivable portfolio has increased 9.3% year-over-year. Now, we believe that the delinquency and portfolio performance trends currently remain stable. In both the third quarters of 2023 and 2022, the respective average yield on financial receivables was 17.7%. In the third quarters of 2023 and 2022, average yields on contract receivables were 8.8% and 8.6% respectively.

Thanks Aldo.

Wow.

That's our third quarter.

Speaker 5: you know i always say that the record could be somewhat squirrely uh... not always indicative of trends

I always say that third quarter can be somewhat squirrelly.

Not always indicative of trends.

Speaker 5: uh... that's because of the sfc and the vacation season around the world but having said that the last three months have been encouraging we took on some significant headwinds the war in the ukraine and the uncertainty in china both politically and economically we engage those challenges came through it all with clear progress new heights across the board

And that's because of the SFC and the vacation seasons around the world, but having said that the last three months have been encouraging we took on some significant headwinds the war in Ukraine, and the uncertainty in China, both politically and economically we engage those challenges came through it all with clear progress new heights across the board.

Speaker 5: Continuing are up, it all continue, upward trajectory, the upward trajectory will be done for some time.

Continuing our up at all continue our upward trajectory with the upward trajectory we've been on for some time.

Aldo Pagliari: Total loan originations of $305.2 million in the third quarter represented an increase of $5 million or 1.7% in 2022 levels, including a 4% increase in originations of finance receivables.

Speaker 5: you know we we spoke in quite a bit about capacity constraint first in the industry business and later in the tools group born of the increasing demand for our solutions and in this quarter we can clearly see the power of such expansions wielded by a capable experience team enabled by the size of advantages and product and brand and applied in markets that are critical and resilient even amidst the challenge

We spoken quite a bit about capacity constraints first in the industrial business and later in the tools group born of the increasing demand for our solutions and in this quarter. We can clearly see the power of such expansions wielded by capable experienced team enabled by decisive advantages in product and brand and applied end markets that are critical in res.

Aldo Pagliari: Moving to slide 11. Our quarter end balance sheet includes approximately $2.4 billion of gross financing receivables with $2.1 billion from our U.S, operation. The 60-day plus delinquency rate of 1.5% for U.S, extended credit is the same as it was in this period last year.

Even amidst the challenges.

Speaker 5: The industrial vision is performing as we said it would. Clear, double digit growth and strong profitability now demonstrated for three straight quarters as its new capacity has come online. And the tools group starting to see the very early effects of that capacity proposal. Closing out the quarter with great momentum.

The industrial Division is performing as we said it would clear double digit growth and strong profitability now demonstrated for three straight quarters as its new capacity has come online and the tools group is starting to see the very early effects of that capacity propulsion closing out the quarter with great momentum.

Aldo Pagliari: On a sequential basis, the rate is up 20 basis points reflecting the seasonal trend we typically experience in the third quarter. As it relates to extended credit or finance receivables, a trailing 12-month net loss in the 47-month 1.9 million represented 2.51% about standings at quarter end, which is up slightly from the 2.45% reported at the end of last quarter.

Speaker 5: and with significant rises in overall profitability. At R tonight, not capacity bound, but establishing a strong and profitable position in the repair shop with software strength, like our Mitchell One system, diagnostic ascendance like our decorated Zeus Plotanto, and by clear answers to challenges of repair complexity, up and down the undercar equipment line, continuing the steep upward trend in that broad product.

And with significant rise in overall profitability at our Tonight, not capacity bound, but establishing a strong and profitable position in the repair shops with software strength like our Mitchell one system diagnostic ascendance like our decorated Zeus plus handheld and black clear answers to challenges of repair complexity up and down the under car equipment.

Aldo Pagliari: Now it turns to slide 12. Cash provided by operating activities of $285.4 million of the quarter represented 115% of net earnings in compared to $129.9 million last year. The improvement is compared to the third quarter of 2022 largely reflects lower year-over-year increases in working investment as well as higher net earnings.

Line, continuing the steep upward trend in that broad product arena.

Speaker 5: This was an encouraging quarter. You can see it in the result.

This was an encouraging quarter you can see it in the results.

Speaker 5: CNI sales up 3.2% organically external sales particularly robust significant gains in critical industries overcoming the uncertainty of Europe and Asia OI margin of 15.9% up 120 basis points to get 70 against 70 basis points of unfavorable current

C&I sales up three 2% organically external sales, particularly robust significant gains in critical industries overcoming the uncertainty of Europe , and Asia Oi margin of 15, 9% up 120 basis points against 70 against 70 basis points of unfavorable currency.

Aldo Pagliari: Net cash used by investing activities of $59.7 million included net additions to finance receivables of $35.1 million and capital expenditures of $25.1 million.

Aldo Pagliari: Net cash used by financing activities of $135.3 million included cash dividends of $85.6 million and the repurchase of $194,000 shares of common stock for $51.8 million under our existing share repurchase programs. As a quarter end, we have remaining availability to repurchase up to an additional $304.5 million of common stock under our existing authorizations. Turning to slide 13, trade and other accounts receivable increased $15.1 million from 2022 year-end. This sales outstanding of 60 days compared to 61 days as of 2022 year-end, inventory has decreased $200,000 from 2022 year-end. Trailing 12 month basis, inventory turns to 2.4 compared to 2.5 year-end 2022.

Speaker 5: The tools groups, sales up organically, 3.7% closer target, exiting the quarter with momentum as the expansion starts to help. And an OI margin of 22% up to 140 basis points. Again, overcoming 50 basis points of currency headwinds. And RS and I, sales rising 3.1%, OI rising 10%, and the OI margin reaching 24.3%, are not blitz of 130 points. And OI margin reaching 24.3%, are not blitz of 100.7%, are not blitz of 100.7%.

The tools group sales up organically, three 7% closer to target exiting the quarter with momentum as we expansion start to help and an oi margin of 22% up 140 basis points again, overcoming 50 basis points of currency headwinds.

<unk> sales rising three 1% Oi rising, 10% and the Oi margins, reaching 24, 3% an uplift of 130 points.

And all of the Corporation higher.

Speaker 5: sales were up 4.7% organically. Overall, Op-Go operating margins were 21.2% again, of 90 basis points, 90 basis points against 50 basis points of bad current.

Sales were up four 7% organically overall.

Overall Opco operating margins were 21, 2% a gain of 90 basis points 90 basis points against 50 basis points of bad currency and all of that drove an EPS of $4 51.

Speaker 5: And all of that drove an EPS $4.51 up versus every compare.

Up versus every comparison.

Aldo Pagliari: Our quarter end cash position of $959.3 million compared to $757.2 million at year-end 2022. Our net debt to capital ratio of 4.8% compared to 9% at year-end 2022.

Speaker 5: And we believe that with our decisive and widening advantages.

And we believe that with our decisive and widening advantages and.

In product.

Speaker 5: staff on value creation process, customer connection and innovation. Keep, keep, will keep rolling out powerful new products day after day. Our advantages in brand, staff on remains the outward sign of pride dignity that working men and women take in their profession. Everybody knows it's true.

The snap on value creation process customer connection and innovation.

Keep we'll keep rolling out powerful new products day after day, our advantages in brand snap on remains the outward sign of pride dignity that working men and women taken their progression everybody knows it's true.

Aldo Pagliari: In addition to cash and expected cash from operations, we entered into a $5-year $900 million multi-currency revolving credit facility on September 12, which amends and restates our previous $800 million dollar facility. As a quarter end, there were no amounts outstanding under the credit facility and there were no commercial paper borrowing some standing.

And advantages in people are.

Speaker 5: are battle tested in capable team. People that expect to rise, even against difficult.

Our battle tested and capable team people that expect to rise even against difficulty.

Speaker 5: With those advantages amplified by capacity investments and applied to resilience and critical markets, we believe that our enterprise will rise on a clear and continuing positive trajectory through the remainder of the year on to 2024 and well beyond.

Aldo Pagliari: That concludes my remarks on our third quarter performance.

With those advantages amplified by capacity investments in applied to resilience and critical to resilient in critical markets. We believe that our enterprise will rise on a clear and continuing positive.

Aldo Pagliari: I now briefly review a few outlook items for the remainder of 2023. We anticipate the capital expenditure will approximate $100 million. In addition, we currently anticipate that our full-year 2023 effective income tax rate will approximate 23%.

<unk> through the remainder of the year on into 2020, 'twenty, four and well beyond.

Nicholas Pinchuk: I now turn the call back to Nick for his closing thoughts. Nick? Thanks.

Speaker 5: Now before I turn the call over to the operator, I'll speak directly to our franchisees and associates. My friend.

Now before I turn the call over to the operator, I'll speak directly to our franchisees and associates.

Nicholas Pinchuk: Well, that's our third quarter. You know, I always say the third quarter could be somewhat squirrely. Not always indicative of trends. That's because of the SFC and the vacation seasons around the world. But having said that, the last three months have been encouraging. We took on some significant headwinds, the war in the Ukraine and the uncertainty in China, both politically and economically. We engage those challenges, came through it all with clear progress, new heights across the board.

My friends.

This was an encouraging quarter.

Speaker 5: It was hard one against significant turbulence and it was driven by your constant dedication and effort.

It was hard won against significant turbulence and it was driven by your constant dedication and effort.

Speaker 5: For the success in our third quarter, delivered by your hands, you have my congratulate.

For the success in the in our third quarter delivered by your hands you have my congratulations.

Speaker 5: For the extraordinary capability you bring the bear every day in every situation

For the extraordinary capability you bring to bear every day in every situation.

You have my admiration.

Speaker 5: And for the unwavering confidence you consistently express and clearly demonstrate in the future of our enterprise and our team, you have my thanks.

And for the unwavering confidence you consistently expressed and clearly demonstrating the future of our enterprise and our team.

Nicholas Pinchuk: It all continue, the upward trajectory we've been on for some time. We've spoken quite a bit about capacity constraints. First in the industrial business, and later in the tools group, born of the increasing demand for our solutions. And in this quarter, we can clearly see the power of such expansions wielded by a capability experienced team, enabled by the sites of advantages and product and brand, and applied in markets that are critical and resilient, even amidst the challenges.

You have my thanks.

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

Speaker 2: Thank you. If you would like to ask a question, please press star then one on your telephone keypad. If your question has already been addressed, do you like to remove yourself from Q? Please press star then two.

Thank you and good luck.

To ask a question. Please press Star then one on your telephone keypad.

My question has already been addressed I would like to remove yourself from queue. Please press Star then two.

Speaker 2: Today's first question comes from Brett Jordan at Jeffries. Please go ahead.

Today's first question comes from Bret Jordan Jefferies. Please go ahead.

Speaker 5: Hey, good morning guys, this is Patrick <expletive> Meon for Brett. Thanks for taking our questions.

Good morning, guys. This is Patrick Buckley on for Brett Thanks for taking our questions.

Nicholas Pinchuk: The industrial vision is performing as we said it would, clear double digit growth and strong profitability, now demonstrated for three straight quarters as its new capacity has come online. And the tools group starting to see the very early effects of that capacity propulsion, closing out the quarter with great momentum and with significant rises and overall profitability. At our tonight, not capacity bound, but establishing a strong and profitable position in the repair shops with software strength like our Mitchell One systems, diagnostic ascendance like our decorated Zeus Plotantel, and by clear answers to challenges of repair complexity up and down the undercar equipment line, continuing the steep upward trend in that broad product arena.

Sure last quarter, you guys called out demand exceeding capacity in a few tools product lines did you see that mix mismatch balance out this quarter or has some of the trends persisted there, yes, well I think what I tried to say in my in my in my remarks is that it got better through the quarter, we started to get some of the value of the capacity expansions will start.

Speaker 5: Last quarter you guys called out to a demand exceeding capacity in a few tools product lines. Did you see that mix mismatch balance out this quarter or have some of the trends persisted there? Yeah, well, I think I tried to say in my remark is that it got better through the quarter. We started to get some of the value where the capacity extensions were starting to get the early effects of those things.

To get the early effects of those things. So you saw some of that start to balance out, but it's still there and we expect it to continue to put those capacity expansions to continue helping us going forward, but it is kind of the same thing. When you have these capacity constraints and they were principally in hand tools and in in the tools group, there and hand tools and in in.

Speaker 5: So you saw some of that start to balance out, but it's still there. We expected to continue to look but those capacity expansions that continue helping us going forward. But it's kind of the same thing. When you have these capacity constraints and they were principally in hand tools and in the tool script, there were hand tools and in tool storage as the quarter, when I see them ease a little bit, but they're not where we want them to be.

Tool storage as the quarter went on you see them ease a little bit, but they are not where we want them to be they're going to be though.

Nicholas Pinchuk: This was an encouraging quarter. You can see it in the results. CNI sales up 3.2% organically, external sales, particularly robust, significant gains in critical industries, overcoming the uncertainty of Europe and Asia. And RS and I sales rising 3.1% OI rising 10% and the OI margin reaching 24.3% are not lifted of 130 points. And they all drove the corporation higher sales were up 4.7% organically, overall op-go operating margins were 21.2% again of 90 basis points, 90 basis points against 50 basis points of bad currency.

Speaker 5: Got it. That's helpful. Thank you. And then within your OEM dealership customer base, you guys will, in that RS and I business, you called out some weakness and lumpiness there. Is overall the man pretty healthy there or what exactly is the driver? The man is pretty healthy on a relative basis. I mean, the thing is, what these businesses, what this business referred to is these are projects program.

Got it that's helpful. Thank you and then within your OEM dealership customer base.

You guys are.

Our F&I business you called out some.

Weakness and Lumpiness there.

As overall demand pretty healthy there or what exactly is the driver of demand is pretty healthy on a relative basis I mean.

What these what these business as to what this is.

<unk> referred to as these are projects programs.

Speaker 5: authored or commissioned by OEMs, principally to deal with the idiosyncrasies of a changing environment or with a new view.

Authored or commission by Oems, principally to deal with the idiosyncrasies of a changing environment or with a new vehicle.

Speaker 5: you know, maybe it needs a new trailer hitch adjustment because something wasn't anticipated or a different tool to take out the wiring harness or maybe to support the...

Maybe it needs a new trailer hitch adjustment because something wasn't anticipated or.

A different tool to take out the wiring harnesses where may be to support.

Speaker 5: vehicle charging stations at dealerships when because electric vehicles are coming on or maybe for a special tool for and what it is the OAM answers to configure the product and then distribute it to its to its to its dealerships

Vehicle charging stations at dealerships when because electric vehicles are coming on or maybe for a special tool and what it is is the OEM asked us to configure the product and then distributed to its due.

Nicholas Pinchuk: And all of that drove an EPS of $4.51 up versus every comparison. And we believe that with our decisive and widening advantages in products, the staff on value creation process, customer connection and innovation keep will keep rolling out powerful new products day after day. Our advantages in brand staff on remains the outward sign of pride dignity that working men and women take in their profession. Everybody knows it's true. And advantages in people are battle tested and capable team.

So its dealerships and that's been going upwards, but it is lumpy.

Speaker 5: and that's been going upwards but it isn't won't be it's big project that's a big project that's a big project so if you get

Big project is a big project, it's a big project. So if you get.

Speaker 5: X number open in one quarter and you get X minus one and another quarter is a little bit of pressure on that. In this situation.

X number of them in one in one quarter and you get X minus one on another quarter is a little bit of pressure on that in this situation. The <unk> business was down somewhat I think low single digits or something like that but it was really last year. It had risen tremendously associated with the with the the fuselage.

Speaker 5: The EQS business was down somewhat, I think a little single digit, just something like that, but it was really last year at RISN tremendously, associated with the fuselage, the fuselage of new models that are rolling out into the markets. And so this is down somewhat versus a pretty strong position. So it just reflects kind of some lumpiness along the surface for that business, and that created some offset for CMI, for our tonight.

The future of new models that are rolling out into the markets and so this is down somewhat versus a pretty strong position. So it just reflects kind of some lumpiness along the surface for that business and that created some offset placebo for our Tonight.

Nicholas Pinchuk: People that expect to rise even against difficult. With those advantages amplified by capacity investments and applied to Resilience and Critical markets, we believe that our enterprise will rise on a clear and continuing positive trajectory through the remainder of the year on to 2024 and well beyond.

Got it that's helpful. That's all for US Thanks, guys sure.

Speaker 7: Thank you, and our next question today comes from Gary Preshtapino with Barrington Research. Please go ahead. Hey, good morning, everyone.

Thank you and our next question today comes from Gary <unk>.

So with Barrington Research. Please go ahead.

Hey, good morning, everyone. Good morning, Gary.

Nicholas Pinchuk: Now before I turn the call over to the operator, I'll speak directly to our franchisees and associates, my friends. This was an encouraging quarter. It was hard one against significant turbulence and it was driven by your constant dedication and effort.

Nick.

Speaker 7: Can you, you said that the orders coming out of the conflents were strong? I mean, could you give us some idea of...

Can you you said that the orders coming out of the.

Conference were strong I mean could you give us some idea of.

Speaker 5: a metric to surround that? I mean, was it one of the... Sure, they were up mid-single digits. So, you know, the nice... We like this kind of thing because it shows we're going to keep growing and that sort of range. We expect to grow. It's been up during the pandemic. It had been up more higher at some points, but generally, a mid-single digit growth is pretty good for us. We were kind of very encouraged by that idea. You know, you got to remember, though, Gary, you know, as you know, very well. These things are just orchards. You know, they are orchards.

Some metric to surround that.

Sure they were up mid single digits. So.

Nicholas Pinchuk: For the success in our third quarter delivered by your hands, you have my congratulations. For the extraordinary capability, you bring the bear every day in every situation, you have my admiration. And for the unwavering confidence, you consistently express and clearly demonstrate in the future of our enterprise and our team, you have my thanks.

The nice we like this kind of thing because it shows we're going to keep growing in that sort of range. We expect to grow it's been upper during the pandemic would have been up more higher at some points, but generally mid single digit growth is pretty good for us we were kind of very encouraged by that idea it.

You got to remember, though Gary as you know very well. These things are just orders you know they are orders they don't they're not necessarily sales and those orders are spread out over six months or seven months. So it's hard to correlate them to anything in particular, but having said that having orders up mid single digits is better than a poke in AI with the <unk>.

Speaker 5: They're not necessarily sales and all the orders are spread out over six months or seven months. So it's hard to correlate them to anything in particular. But having said that, having orders up mid-single digits is better than a poking an eye with a sharp stick. You know, it's okay. We kind of like that.

Operator: Now I'll turn the call over to the operator. Operator. Thank you. If you would like to ask a question, please press star then one on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then two.

<unk> stick you know its okay, we kind of like that right.

Speaker 7: Okay, and then just a question just in terms of...

Patrick Buckley: Today's first question comes from Brett Jordan at Jeffries. Please go ahead. Hey, good morning guys. This is Patrick Buckley on for Brett. Thanks for taking our questions. Sure. Last quarter you guys called out to demand exceeding capacity in a few tools, product lines. Did you see that mix mismatch, balance out this quarter or have some of the trends persisted there? Well, I think I tried to say in my remarks is that it got better through the quarter.

Okay and then.

Just a question just in terms of.

Speaker 7: As we go forward as the car park gets older, but you're starting to get more of a proliferation of older cars with technology.

As we go forward as the car park gets older but youre starting to get more of a proliferation of older cars with technology.

Speaker 5: Where does your emphasis go at that point? Does it more or less shift from hand tools to increase diagnostics, specialized diagnostics for these cars, or is that just, or maybe you can give us some guidance there? Well, you know, the thing is, is that you would think that would be logical, you know? I would. Yeah, for sure it boasts greater impact.

Where does your emphasis go at that point.

More of a shift from hand tools too.

Increased diagnostics specialized diagnostics for these cars or is that just.

Or maybe you can give us some guidance there.

Patrick Buckley: We started to get some of the value where the capacity experiences were starting to get the early effects of those things. So you saw some of that start to balance out, but it's still there. We expected to continue to, but those capacity expansions that continue helping us going forward. But it was kind of the same thing. When you have these capacity constraints, and they were principally in hand tools and in, in the tools group, they were in hand tools and in, in tool storage as the quarter when I see them ease a little bit, but they're not where we want them to be. They're going to be, though. Got it. That's helpful. Thank you.

The thing is is that you would think that would be logical.

I would.

For sure it bodes greater emphasis on electronics and software.

Speaker 5: on electronics and software and other highly high tech things, things like calibrations and things like that which are the words of the day, then they are now. You're going to see a continuing upswing of that investment and the capability and value and revenue and profit generated by that stream. But I'm not so sure that hand tools will be at any way.

And others.

Highly high Tech things things like got calibrations, and things like that which are the words of the day than they are now then you're going to see a continuing upswing of that investment and the and the capability and value and revenue and profit generated by that stream bot I'm not so sure that hand tools will be attenuated.

Nicholas Pinchuk: And then within your OEM dealership customer base, you guys will, in that RSI business, you called out some weakness and lumpiness there. Is overall the man pretty healthy there, or what exactly is the driver? The man is pretty healthy on a relative basis.

Speaker 5: Because as we look backwards, you know, we remember this industry in the 90s, where the number of trouble codes, electronic trouble codes on a car were measured in dozens, now they're measured in tens of thousands, and the demand for hand tools is only going up.

Because as we look backwards you know we remember this industry in the nineties, whereas the number of trouble codes electronic trouble codes on a car were measured in dozens now they're measured in tens of thousands and the demand for handheld is only going up.

Nicholas Pinchuk: I mean, the thing is, what these, what these businesses, what this business refer to is, these are projects, programs, authored or commissioned by OEMs, principally to deal with the idiosyncrasies of a changing environment or with a new vehicle. You know, maybe it needs a new trailer hitch adjustment because something wasn't anticipated or a different tool to take out the wiring harness, or maybe to support vehicle charging stations at dealerships, because electric vehicles are coming on, or maybe for a special tool.

Speaker 5: So I'm not so sure that hand tools will be lessened. I believe that software and electronics and diagnostics and calibration will be increased.

So I would I'm not so sure that hand tools will be lessened I believe that software and electronics in diagnostics and calibration will be increased.

Speaker 5: That's what I would say. Now, by the way, the handles are pretty good, margin.

That's what I would say by the way the handfuls of pretty good margin.

Speaker 5: But it's harder predictos, because you know, like I tried to explain in the explanations I was putting out with the diesel plug, gold plug sockets, and the triple flex functioner actually.

But it's hard to predict those because you like I tried to explain in the end.

And the explanations I was putting out with the diesel plug all plug sockets and the triple flex function of Ratchet really these are things that are observed after their cars on the road and you see the struggle struggles with technicians are having and you enable them.

Speaker 5: Really these are things that are observed after the cars on the road and you see the struggles or technicians are having and you enable them.

Nicholas Pinchuk: And what it is, is the OEM asks us to configure the product and then distribute it to its dealerships. And that's been going upwards, but it is won't be, it's a big project, that's a big project, that's a big project. So if you get... X number of men in one quarter, and you get X minus one in another quarter, there's a little bit of pressure on that. In this situation, the EQS business was down somewhat, I think a little single digits or something like that, but it was really last year had risen tremendously, associated with the fuselage of new models that are rolling out into the markets. And so this is down somewhat versus a pretty strong position. So it just reflects kind of some lumpiness along the surface for that business, and that created some offset for our time.

Speaker 5: And so I would anticipate they'll continue to be in demand as we go forward. We haven't seen any abatement of that demand, even as we've seen a growth in the electronics and calibration business.

Patrick Buckley: Got it, that's helpful, that's all for us.

And so I would anticipate they'll continue to be in demand as we go forward, we haven't seen any abatement of that demand even as we've seen a growth in the electronics and calibration business.

Operator: Thanks, guys.

Speaker 7: And then, it's a question for Aldo, just on the tax rate, Aldo. I think you'd kinda said, and I have the numbers in front of me, but your tax rate for this year would be between 23 and 24% on previous calls. Now you stepped it down to 20%.

Okay, and then just a question for all though just on the tax rate, although I think you kind of said.

The numbers in front of me, but your tax rate for this year would be between 23 and 24% on previous calls.

Now you've stepped it down to 23%.

Speaker 7: but to get to that kind of a tax rate for the year.

But to get to that kind of a tax rate through the year, you're going to have to be somewhere over 24% for Q4 am I reading that right well be in the neighborhood of actually I think our rate year to date. If you put them altogether is around $22 nine or something like that so we're we're in the ballpark area. So I think it will be in that neighborhood in Q4, we had some.

Speaker 7: You're gonna have to be somewhere over 24% for Q4. Am I reading that right?

Speaker 6: I'll be in the neighborhood, actually, of, I think, our rate year to date is to put them all together around 22.9 or something like that. So we're in the ballpark area, so I think it'll be in that neighborhood in Q4. We had some favorable outcomes on reducing our state taxes along with some other items, but that's what benefited Q3. You notice Q3 last year was even better. So sometimes there's this variation that occurs from time to time. But 23 is about the right number.

Gary Prestopino: Thank you, and our next question today comes from Gary Prestopino with Barrington Research. Please go ahead. Hey, good morning, everyone. Good morning, Gary. Nick, can you, you said that the orders coming out of the conference were strong? I mean, could you give us some idea of some metric to surround that? I mean, was it one of the... We expect the growth. It's been up during the pandemic, it had been up more higher at some points, but generally, a mid-single digit growth is pretty good for us.

Favorable outcomes.

Reducing our state taxes, along with some other items, but that's what benefited Q3 as Q3 last year was even better. So sometimes there is variation that occurs from time to time.

But 'twenty three is about the right number I think we're going to get through this.

Speaker 5: upcoming full year. Yeah, actually you look, you look year over year, we had kind of a what, six, seven, six, six cents impact for taxes year over year. Big quarter. Thank you, thank you. Thank you for your over year. Yeah, so we still rub, you know, 8.9% even with the 37 cents, even with that six percent, six cents impact.

Upcoming full year <unk>.

Okay.

You look year over year, we had you know.

Kind of a what 67566 cents impact for taxes year over year linked quarter negative negative Omega yeah.

So we still were up eight 9%, even with a 37% even with that 6% 6% impact.

Okay. Thank.

Thank you.

Gary Prestopino: We were kind of very encouraged by that idea. You know, we've got to remember, though, Gary, as you know, very well. These things are just orders. You know, they are orders. They're not necessarily sales, and those orders are spread out over six months or seven months, so it's hard to correlate them to anything in particular. But having said that, having orders up mid-single digits is better than a poking an eye with a sharp stick. You know, it's okay. We kind of like that.

Speaker 2: Thank you. And our next question today comes from David McGregor with Longbow Research. Please go.

Thank you and our next question today comes from David Macgregor with Longbow Research. Please go ahead.

Speaker 6: Yeah, good morning, everyone. I guess I want to just, hey, Nick. I just wanted to ask you about the UAW strike and any potential impact or repercussion we'd be seeing across the business. We talked already about this.

Yes, good morning, everyone.

Hi, David.

I just wanted to ask you about the UAW strike and any potential impact of repercussion you may be seeing across the business you talked already booked.

Speaker 7: The dealership business and characterizes being lumpy, but I'm wondering if maybe OEMs told you to hit the brakes on that. Well, they're slowing up the strike issues. And then there was any follow-up on the tool segment as well.

The dealership business.

As being lumpy, but I'm wondering if maybe Oems towards it hit the brakes on that well.

Nicholas Pinchuk: Okay. And then just a question, just in terms of, as we go forward, as the car park gets older, but you're starting to get more of a proliferation of older cars with technology. Where does your emphasis go at that point? Does it more or less shift from hand tools to, you know, increase diagnostics, specialized diagnostics for these cars, or is that just... Or maybe you can give us some guidance there. Well, you know, the thing is, is that you would think that would be logical.

Destroy tissues and then if there was any followed on the tools segment as well.

Speaker 5: Yeah, you know, that's a complicated look. Look, it's hard to predict, of course. You know, this is like shooting darts in the dark or something, you know, but, but look, I think this is the situation.

Yeah.

That's a complicated.

It's hard to predict of course, you know this is like shooting darts in the dark or something but but look I think I think this is the situation.

Speaker 5: First of all, I want to correct just a little bit. The dealership business itself.

First of all I want to correct, just a little bit the dealership business itself was not down the OEM programs were down some but they were still at a relatively historically high levels, even though they backed off a little bit year over year. So we haven't seen what I would call a significant pullback.

Speaker 5: was not down, the OEM programs were down some, but they were still at a relatively historically high levels, even though they backed off a little bit year over year. So we haven't seen what I would call a significant pullback in the OEM programs at this point. Having...

Nicholas Pinchuk: You know, I would. For sure, it bodes greater emphasis on electronics and software and other highly tech things, things like calibrations and things like that, which are the words of the day, then they are now. You're going to see a continuing upswing of that investment and the capability and value and revenue and profit generated by that stream. But I'm not so sure that hand tools will be attenuated. Because as we've looked backwards, you know, we remember this industry in the 90s, where the number of trouble codes, electronic trouble codes on a car were measured in dozens, now they're measured in tens of thousands, and the demand for hand tools is only going up.

And the OEM programs at this point, having said that the Oes the UAW strike I used to work for the auto companies themselves and their cash monsters. They.

Speaker 5: The UAW strike, I used to work for the auto companies themselves, you know, and they're cash monsters, you know, they eat cash like mad. And so it could happen if the strike goes on longer, you could see some diminishment in that business. And that-

They eat cash like Mad and so it could happen if the strike goes on longer you could see some diminishment in that business in that particular business now when that would hit I'm not so sure because you know they might not canceled programs I should just delay some or they may they may in fact canceled future program.

Nicholas Pinchuk: So I'm not so sure that hand tools will be lessened. I believe that software and electronics and diagnostics and calibration will be increased. That's what I would say. Now, by the way, the handfuls are pretty good margin, but it's harder to predict those because you know, like I tried to explain in the explanations I was putting out with the diesel plug, gold plug socket, and the triple flex function and ratchet. Really, these are things that are observed after the cars on the road and you see the struggles with technicians are having, and you would enable them.

Speaker 5: Now when that would hit, I'm not so sure because you know, they might not cancel programs, they might not just delay some, or they may in fact cancel future programs. Not so clear how they would play out, but it is a possibility that that would happen. Regarding the dealerships themselves.

It's not so clear how that would play out but it is a possibility that that would happen regarding the dealerships themselves.

Speaker 5: I don't necessarily, I think the effect on them is unknowable because sometimes, you know, if they don't get new cars, they just turn more attention to repair in parts. And so this is good.

Don't necessarily but I think the effect on them is unknowable, because sometimes you know if they don't get new cars. They just turned more attention to repair and parts and so this is good news for us sometimes they pull in batten down the hatches and reduce but generally I think they tend to look at more at repair.

Speaker 5: Sometimes they pull in the, you know, batten down the hatches and reduce. But generally, I think they tend to look at more at repair in parts if they don't get the new cars. And that's not so bad. So I see that as being the two possibilities playing.

Parts, if they don't get the new cars and that's not so bad so I see that as being the two possibilities playing out.

Speaker 8: Right. Okay, thanks for that. And then just back to your earlier observation, the DSFC order book was up 5% to a digital digital digital digital digital digital. I didn't say 5% of that. Did single, no, you said that single. Right, right. I don't know if it's a single.

Right, Okay. Thanks for that.

And then just back to your earlier observations at the SFC Order book was up 5% or mid single digits I didn't say that.

It's singles No you said mid single.

Nicholas Pinchuk: And so I would anticipate they'll continue to be in demand as we go forward. We haven't seen any abatement of that demand, even as we've seen a growth in the electronics and calibration business. Okay, and then this question for Aldo, just on the tax rate, Aldo, I think you'd kind of said, and I have numbers in front of me, but your tax rate for this year would be between 23 and 24% on previous calls.

My mistake.

Speaker 8: I'm just trying to sort of reconcile that with some of the capacity challenges you're facing, which are clearly improving, but sound like there'll still be somewhat of an issue in 4Q. Do you see more of the fulfillment on that order growth being channeled into sort of 4Q and maybe on a year-over basis than what you would've seen a year ago when there wasn't that kind of an impediment place and there's a consequence you might see?

I'm, just trying to reconcile that with some of the capacity challenges you're facing.

Clearly improving but it sounds like you'll still be somewhat of an issue for Q.

Nicholas Pinchuk: Now you stepped it down to 23%, but to get to that kind of a tax rate for the year, you're going to have to be somewhere over 24% for Q4. Am I reading that right? I'll be in the neighborhood, actually, of I think our rate year to date is to put them all together is around 22.9 or something like that. So we're in the ballpark area, so I think it'll be in that neighborhood in Q4.

Do you see more of the fulfillment on that order growth being channeled into sort of <unk> and maybe on a year over basis than what you would see a year ago. When there wasn't that kind of an impediment placed and as a consequence you might see.

Speaker 8: a little bit of incremental growth from that concentration of 4Q.

A little bit of incremental growth.

Concentration for Q.

Speaker 5: I guess, I don't know. I think, I'm not quite sure I understood exactly the import of your question, David, but the thing is, the way I see it is, the capacity's getting better. You know, even if you have the building up, you can start putting in the machines, there's a ramp up here, you know, you don't have this worse. And so you kind of get this, this starts to help you. The first product that comes out as a health, but it's not so clear how much of a health it will be. I think you'll still see us in the fourth quarter, trying to stick handle around.

I guess I don't know I think I'm not quite sure I understood exactly the importance of your question, David but but the thing is the way I see it as the capacity is getting better even in even if you have the building up and to start putting in the machines. There's a ramp up period. You know you know how this works and so you kind of get this it starts to help you with the first the first.

Nicholas Pinchuk: We had some favorable outcomes on reducing our state taxes along with some other items, but that's what benefited Q3. You notice Q3 last year was even better. So sometimes this is a variation that occurs from time to time. But 23 is about the right number, I think we're going to get to in this upcoming full year. Yeah, I've actually looked here. You're looking over year, we had kind of a what? 6.75, 6 cents impact for taxes year over year. Big quarter. Negative. Yeah. So we still are up, you know, 8.9%, even with the 37 cents, even with that 6%. 6 cents impact.

Product that comes out as a help but it's not so clear how much of a help it will be I think you'll still see us in our fourth quarter trying to stick handle around the capacity issues and that's part of the thing that's here, but that stick handling will get more less complex and therefore, we should be able to take more advantage of the orders but.

Aldo Pagliari: Okay.

Operator: Thank you.

Speaker 4: the capacity issues and that's part of the thing that's here, but that's the handling will get more complex.

Speaker 4: and therefore we should be able to take more advantage of the orders. But the timelines, the time constants associated with that are always...

The timelines the time constants associated with that are always pretty hard to predict that dependent on your ability to ramp up which we have a lot of faith in and they're dependent on the nature of the orders applied against those I would simply say that looking forward, we feel like we're in a better position than looking recently.

Speaker 4: pretty hard to predict. It's dependent on your ability to wrap up which we have a lot of faith in. And it's dependent on the nature of the orders applied against those. I would simply say that looking forward, we feel like we're in a better position than looking recently back.

Afterwards.

Speaker 8: And then they're enabled, maybe this is a question for all though, but are you able to talk about just, you know, the impact on margins from the capacity constraints and the incremental costs associated with that? And three, two.

Okay.

David Macgregor: And our next question today comes from David McGregor with Longbow Research. Please go ahead. Yeah, good morning, everyone. I just wanted to ask you about the UAW strike, and any potential impact or repercussion we'd be seeing across the business. You talked already about the dealership business and characterizes being lumpy, but I'm wondering if maybe OEMs told you to hit the brakes on that. Well, they're slowing up the strike issues and then there was any followed on the tool segment as well. Yeah, you know, that's a complicated. Look, it's hard to predict, of course. You know, this is like shooting darts in the dark or something. You know, but look, I think this is the situation.

And then for you.

Just a question for Aldo, but are you able to talk about just the impact on margins for your capacity constraints and the incremental costs associated with that.

Speaker 6: Well, the overall larger performance was pretty solid as you saw across the board. Sure, there are incremental costs and expediting expenses and elements of overtime, of overtime having to be expended.

The overall margin performance was pretty solid as you saw across the board sure there are incremental costs and expediting expenses and elements of overtime of overtime having to be expensive.

But at the same time, we with the supply chain improvements that have occurred over the past 12 months or so we have more resources to turn our attention to RCI initiatives. So David while there is a lot of challenge in any quarter, where we expect to rise to the occasion to try to offset those incremental costs.

Speaker 6: We would supply chain improvements that have occurred over the past 12 months or so. We have more resources to turn our attention to RCI initiatives. So David.

Speaker 5: Well, there is a lot of challenge in any quarter when we expect to rise the occasion and try to offset those incremental costs. But yes, there'll be some incremental costs involved, but the tools group and the other segments are looking for ways to offset that. Gigi, I don't know. I had to chime in here, though, you know, in my bullet.

Obviously, the incremental cost involved but the tools group and the other.

Nicholas Pinchuk: First of all, I want to correct just a little bit. The dealership business itself was not down. The OEM programs were down some, but they were still at a relatively historically high levels, even though they backed off a little bit year over year. So we haven't seen what I would call a significant pullback in the OEM programs at this point. Having said that, the UAW strike, I used to work for the auto companies themselves, you know, and they're cash monsters, you know, they eat cash like mad. And so it could happen if the strike goes on longer. You could see some diminishment in that business, in that particular... Business.

The segments are looking for ways to offset that.

I have to chime in here, though you know in my book.

Speaker 5: I think over a hundred basis points, margin improvement in every segment. I don't know.

Think over 100 basis points margin improvement in every segment.

Sounds gangbusters to me.

Speaker 5: not so. That's all I think it sounds good to me. So I think it should be helped going forward but I'm not sure where that will all lay out. We anticipate, like I say, we expect to improve margins all the time.

So that's why I think it sounds pretty good to me. So I think I think it should be helped going forward, but I'm not sure you know.

Where that will lay out we anticipate like I say, we expect to improve margins all the time.

Great. Thanks, gentlemen.

Speaker 2: Thank you and our next question to the A-Consumable Christopher Glenn with Oppenheimer. Please go ahead.

Thank you and our next question today comes from Christopher Glynn with Oppenheimer. Please go ahead.

Nicholas Pinchuk: Now, when that would hit, I'm not so sure because, you know, they might not cancel programs, they might not just delay some, or they may, they may in fact cancel future programs. Not so clear how it would play out, but it is a possibility that that would happen. Regarding the dealerships themselves, I don't necessarily, I think the effect on them is unknowable because sometimes, you know, if they don't get new cars, they just turn more attention to repair and parts, and so this is good news for us.

Speaker 4: Hey, thanks. Good morning all. Curious Nick, if you could elaborate on your comments about expanding capabilities in the critical industry space, what types of activities, what's the scale, what exactly are you chasing so to speak? Well, look, I think this, first of all, I would say that we haven't plummed.

Hey, Thanks, good morning, all.

Curious Nick if you could elaborate on your comments about it.

Adding capabilities in the critical industry space, what types of activities, what what's the scale of what exactly are you.

Chasing so to speak.

Well look I think I think this first of all I would say that we havent plums the complete ceiling of the first capacity expansion by the way just as a commercial if you wanted if you want to be hold the capacity expansion you can look at it on I think the back page of our or all of our annual report this year. So it's.

Speaker 5: the complete ceiling of the first capacity expansion. By the way, just as a commercial, if you want to be whole of the capacity expansion, you can look at it on, I think, the back page of our annual report this year. So it's right there. It's a pretty, pretty sizable thing. And so we're still figuring out how to wield it. That's how it works. You start out, and it's pretty good, and then you do better and better and better. So I think we have some ways to go there. What I'm talking about adding is we just added a new machine shop.

Nicholas Pinchuk: Sometimes they pull in the, you know, batten down the hatches and reduce, but generally, I think they tend to look at more at repair and parts if they don't get the new cars, and that's not so bad. So I see that as being the two possibilities playing out. Right. Okay, thanks for that. And then, just back to your earlier observation, the DSFC order book was up 5% to a mid-single digit. I didn't say 5%.

Right, there, it's pretty pretty sizable thing and so we're still figuring out how to wield that that's how it works.

To start out and it's pretty good and then you do better and better better. So I think we have some some ways to go there what I'm talking about adding is we just added a new machine shop, just for the critical industries in that space and so that's a particular products, where we used to have to outsource them. They took longer to do and we werent as effective in getting them.

Speaker 5: just for the critical industries in that space. And so that's a particular product where we used to have to outsource them. They took longer to do and we weren't as effective in getting them out. And so we decided to do it ourselves in-house.

Nicholas Pinchuk: No, you said mid-single. Right. I'm just trying to sort of reconcile that with some of the capacity challenges you're facing, which are clearly improving, but sound like there'll still be somewhat of an issue in 4Q. Do you see more of the fulfillment on that order growth being channeled into sort of 4Q and maybe on a year-over basis than what you would've seen a year ago when there wasn't that kind of an impediment place and there's a consequence you might see a little bit of incremental growth from that concentration of 4Q.

And so we decided to do it ourselves in house.

Speaker 5: And so we see that'll match up one. We can be more efficient in sourcing, which is a big factor for us, and two, we can be more creative and actually matching the direct demands that customers want. So that's what I mean.

And so we see that will match up one we can we can be more efficient in sourcing, which is a big factor for us until we can be more creative and actually matching the direct demands that customers want them. So that's what I meant.

Speaker 7: Great. And then, you know, cash is approaching a billion dollars now, not sure what level you're comfortable holding, but they'll kind of keep piling up unless you accelerate some sort of deployment. So I'm wondering how you're thinking about that cash balance.

Great.

And then cash is approaching $1 billion now not sure what level youre comfortable holding.

Nicholas Pinchuk: I guess. I don't know. I think I'm not quite sure I understood exactly the import of your question, David, but the thing is the way I see it is the capacity is getting better. You know, even if you have the building up and you start putting in the machines, there's a ramp up here. You know, you don't have this worse. And so you kind of get that this starts to help you.

Keep piling up.

Unless you accelerates I'm, sorry deployments, so I'm wondering how you're thinking about that cash balance.

Speaker 5: Well, look, I think this, first of all, we are very working capitalists.

Well look I think I think this first of all we are very working capital intense so as we move upwards you tend to use some of that cash for working capital. Although we are in an era, where we were we used working capital to Cushing ourselves against the difficulties of the pandemic. So some of that gold and a way out.

Nicholas Pinchuk: The first product that comes out as a health, but it's not so clear how much of a health it will be. I think you'll still see us in a fourth quarter trying to stick handle around the capacity issues and that's part of the thing that's here, but that stick handling will get less complex. And therefore we should be able to take more advantage of the orders, but the timelines, the time constants associated with that are always pretty hard to predict. It's dependent on your ability to ramp up, which we have a lot of faith in. And it's dependent on the nature of the orders applied against those.

Speaker 5: So as we move upwards, you know, you tend to use some of that cash for working capital, although we're in an era where we were, we used working capital to cushion ourselves against...

Speaker 5: the difficulties of the pandemic. So some of that got away out.

Speaker 5: We look hard at our dividends, which we have paid every quarter since 1939. And I love to say at this point, have never reduced it any quarter since 1939. And so perpetuity is our guiding light on dividends. So we'll look at that again. We'll look at that. And then you have things like pension and you have things like acquisition.

We look hard at.

At our dividends, which we have which we have paid every quarter since 1939, and I love to say at this point have never reduced it any quarters since 1939, and so perpetuity as our as our guiding light on dividends. So we'll look at that again you know, we'll look at that and then do you.

Nicholas Pinchuk: I would simply say that looking forward, we feel like we're in a better position than looking recently backwards. Great.

Have things like pension and you have you have things like acquisitions, which are important to us. So we have a landscape of acquisitions, which we'll constantly look at like I always say some are big some are small.

Aldo Pagliari: And then, are you able to, maybe this is a question for all though, but are you able to talk about just, you know, the impact on margins through the capacity constraints and the incremental costs associated with that in 3Q? Well, the overall larger performance is pretty solid as you saw across the board. Sure, there are incremental costs and expediting expenses and elements of overtime, of overtime having to be expended. But at the same time, we, with the supply chain improvements that have occurred over the past 12 months or so, we have more resources to turn our attention to RCI initiatives.

Speaker 5: which are important to us. So we have a landscape of acquisitions in which we're constantly looking at, like I always say, summer big, summer small. And we're not afraid.

And we're not afraid to make a big one.

Speaker 5: So I kind of like having a war chest for that, especially in these times when the interest rates are pretty high. And then finally, we look at buying back opportunities to be shared.

So I kind of like having a war chest for that especially in these times when the when the interest rates are pretty high and then finally when you look at.

Buying back Opportunistically shares.

Speaker 9: Yeah, following up on the pipeline, are you seeing any changes in availability, actionability of some of the larger prospects? I'm not seeing any.

Okay.

Yes, following up on the pipeline.

What are you seeing any changes in availability action ability.

Some of the larger prospects.

I'm not seeing any.

Aldo Pagliari: So, David, while there is a lot of challenge in any quarter, we expect to rise the occasion and try to offset those incremental costs. But yes, there'll be some incremental costs involved, but the tools group and the other, the segments are looking for ways to offset that. DJ, I don't know.

Speaker 5: I guess we see a little bit more availability. I'm not sure action ability is any better or not. I think there's been a lot of discussion at that. I think bankers, every banker you see wants to talk about that. But I don't see much difference in that regard.

I guess, we see a little bit more availability I'm not sure action ability is any better or not I think there's been a lot of discussion of that I think bankers every banker youll see wants to talk about that but I don't see much difference in that regard.

Speaker 5: You would think prices would be coming down with, maybe with industry rising, I don't know, but I don't see that. We see a little more availability though. Little more availability.

You would think prices will be coming down with the maybe with interest rates rising I don't know, but but.

Nicholas Pinchuk: I had to chime in here though, you know. In my book, I think over 100 basis points margin improvement in every segment. Benjamin, I don't know, sounds gangbusters to me, you know, so I think it sounds good to me, so I think it should be helped going forward, but I'm not sure where that will all lay out. We anticipate, like I say, we expect to improve margins all the time. Great. Thanks, gentlemen.

I don't see that we see a little more availability, though a little more available.

Speaker 5: Okay, great. Sorry, last one for me. I think you said technician counts up mid to high single digits. Imagine there's some lag effect to seeing that benefit. Is that fair to think about that as a lead indicator and driver during the 20 more? I think that is fair to look. I think I especially sense there's an accelerator there, Chris. You know, I've been in this job for 10 years and for most of the years, technicians were growing at one person.

Okay, Great sorry last one for me I.

I think you said.

Nursing counts up mid to high single digits.

You mentioned there is some lag effect to seeing that benefit is that fair to think about that as a lead indicator and driver.

Good morning.

I think that is fair to look at I think especially since there was an accelerator there Chris you know I've been in this job umpteen years and for most of the years technicians were growing at 1%. One one that was just it was really like a like a metronome 11111, plus and now it's growing mid single digits and so this has got to come in and accelerate for us because.

Christopher Glynn: Thank you. And our next question today, Christopher Glynn, with Oppenheimer, please go ahead. Hey, thanks. Good morning, all.

Speaker 5: 1.1, that was just it. It was like a like a metronome, 1.1, 1.1, 1.1. And now it's growing in single digits. And so this has got to come in and accelerate for us. Because if one, there'll be more technicians and two, the new guys need to tool up.

Nicholas Pinchuk: Curious, Nick, if you could elaborate on your comments about expanding, adding capabilities in the critical industry space, you know, what types of activities, what's the scale, what exactly are you chasing, so to speak. Well, look, I think, I think this, first of all, I would say that we haven't plumbed the complete ceiling of the first capacity expansion. By the way, just as a commercial, if you want to, if you want to behold the capacity expansion, you can look at it on, I think the back page of our annual report this year.

One there'll be more technicians and to the new guys need the tool up now.

Speaker 5: Now of course that tool up takes on different shapes. So for example, they may not be buying the top of the line boxes right away. They may be focused on carts, which in fact, if you look at our tool stores business in the past quarter, it was heavily guided to carts. And so we're seeing some of that effect right now. But they do need to tool up. And one of the great things about it is we spent, I think we were like,

Now of course that tool up Pat takes on different shapes. So for example, they may not be buying the top of the line boxes right away. They may be they may be focused on cards, which in fact, if you looked at our tool storage business in the past quarter was heavily guided the cards and so we're seeing some of that effect right now but.

But they do need the tool up and one of the great things about it is we spent I think we would like.

Speaker 4: thousands of schools around the country trying to make sure that people understand that the snap on brand is the most powerful brand repair making students snap on customers for life and i think we see that as they come out into the marketplace so growing texas music to our ears

Nicholas Pinchuk: So it's right there, it's a pretty, pretty sizable thing. And so we're still figuring out how to wield it. That's how it works, you know. You start out, and it's pretty good, and then you do better and better. So I think we have some some ways to go there.

<unk> of schools around the country trying to make sure that people understand that the snap on brand is the most powerful brand in repair and making students snap on customers for life and I think we see that as they come out into the marketplace, So growing Texas music to our ears.

Nicholas Pinchuk: What I'm talking about adding is we just added a new machine shop just for the critical industries in that space. And so that's a particular product where we used to have to outsource them. They took longer to do, and we weren't as effective in getting them out. And so we decided to do it ourselves in house. And so we see that'll match up one, we can, we can be more efficient in sourcing, which was a big factor for us and two, we can be more creative and actually matching the direct demands that customers want. So that's what I meant.

Thanks for all the color.

Nicholas Pinchuk: Great.

Sure.

Speaker 2: Thank you. And our next question today comes from Scott Stumber with Roth MKM. Please go ahead. Welcome. Good morning, guys. Thank you.

Thank you and our next question today comes from Scott number with Ross.

Please go ahead.

Good morning, guys. Thanks for taking my question.

Speaker 6: Hey, within the tools, can you just tell us how some of the sub-segment did hand tools versus tool stores versus diagnostics in powertools?

Hey within the tools.

Can you just tell us how some of the sub segments did.

<unk> versus two stores versus diagnostics and power tools.

Speaker 5: Yeah, look, I think the big, the big gihona this month was, was hand tools. I just cannot month quarter was hand tools. Hand tools sold very well in the quarter.

Yeah look I think I think the big the Big Kahuna. This month was what's handful at this nine month quarter was hand tools hand tools sold very well in the quarter and so that that was pretty strong diagnostics was off some after three good quarters and they didn't have a new a new installation here in power tool.

Nicholas Pinchuk: And then, you know, cash is approaching a billion dollars now, not sure what level you're comfortable holding, but they'll kind of keep piling up unless you accelerate some sort of deployment. So wondering how you thinking about that cash balance. Well, look, I think I think this, first of all, we are very working capital intense. So as we move upwards, you know, you tend to use some of that cash for working capital, although we're in an era where we were we used working capital to cushion ourselves against the difficulties of the pandemic.

Speaker 5: And so that was pretty strong. Diagnostics was off some after three good quarters, you know, and they didn't have a new installation here. And Power Tools was down somewhat because the stubby wasn't launched for sale until after the SFC. So that was really a back end phenomena, given part of the great momentum in that situation. If you looked at the back end, you would see Power Tools being a big factor in that situation because it's so light.

<unk> was down somewhat because the stubby wasn't launched for sale until after the SFC. So that was really a back end phenomena given part of the great momentum and that situations. If you looked at the back end you would see power tools being a big factor in that situation because of solid light.

Speaker 5: like wildfire, you know, like I said the wait was worth it, but we demonstrated it at the SFC, people were crowned around it, but we weren't selling it. We just wanted to create more pent up demand in that situation. Two stores was down somewhat, but that was pretty much a substitution of, as I just said, of... of... Oh.

Nicholas Pinchuk: So some of that got away out. So we look hard at our dividends, which we have, which we have paid every quarter since 1939, and I love to say at this point, have never reduced it any quarter since 1939. And so perpetuity is our guiding light on dividends. So we'll look at that again, you know, we'll look at that. And then you have things like pension and you have, you have things like acquisitions, which are important to us.

Wildfire you know like I said the way it was worth it but we demonstrated at the SFC people were crowding around it but we werent selling it we just wanted to create more pent up demand in that situation tool storage was down somewhat but that was pretty much a substitution of as I just said of Oh.

Speaker 5: The carts, which are lower value per unit than the bigger units, and they take up a little more manufacturing space. So that kind of thing was in tool storage. Units were pretty good, but revenues were a little lower because of them.

The car, which are lower lower value per unit than the bigger units and they pick up a little more a little more manufacturing space. So that kind of thing is what wasn't was in tool storage.

Nicholas Pinchuk: So we have a landscape of acquisitions, which we're constantly look at, like I always say, summer, big summer, small. And we're not afraid to make a big one. So I kind of like having a war chest for that, especially in these times when the interest rates are pretty high. And then finally, we look at, you know, buying back opportunities to please share.

Units were pretty good but revenues were a little lower because of the mix.

Speaker 5: God, and as far as sales off the van versus into the van. Sales off the van probably follows the, you can say they pretty much follow the toolscrupe, you know, in terms of, in terms of the numbers you saw on the toolscrupe in general overall and the rise at the end of the quarter. You know, I think, one of the things this time, I think we saw a lot of the case.

Got it and as far as the sales off the van versus instrument sales off the van probably followed the you can say they pretty much follow the tools group.

In terms of in terms of the the numbers you saw in the tools group in general overall in the rise at the end of the quarter I think I think one of the things at this time I think we saw a lot of vacations.

Nicholas Pinchuk: Yeah, following up on the pipeline, are you seeing any changes in availability, action, ability of some of the larger prospects? I'm not seeing any, yeah. I guess we see a little bit more availability. I'm not sure action ability is any better or not. I think there's been a lot of discussion at that. I think Banker is every banker you see wants to talk about that. But I don't see much difference in that regard. You know, you would think prices would be coming down with maybe with industries rising. I don't know, but, but you, I don't see that we see a little more availability though, little more available.

Speaker 5: You know, in some cases, you know, like we always do. That's why I say these quarters are squirreling.

Christopher Glynn: Okay, great.

In some cases like we always do that's why I say these quarters are squarely.

Speaker 6: as a cell in, the cell through was essentially the same as so in. Probably the same, yeah. Got it. And then just a last housekeeping question. I saw the corporate expense up five plus million. What was that related to?

So.

Sell through was essentially the same as so it's not really the same yeah got it and then just a last housekeeping question I saw the Corp, corporate expense up five plus million.

Was that related to.

Speaker 5: Pretty much stock-based compensation was a lot of it. And part of that is, you know, okay, I think we're doing a little better this year than last year than just the basic year. But also, you know, after you put several years together of good, you know, if you go back, you look at our numbers, they're up, up, up, up, up, up.

Pretty much stock based compensation was a lot of it and part of that is okay. I think we're doing a little better this year than last year and just the basic year, but but also <unk>.

Nicholas Pinchuk: Sorry, last one for me. I think you said technician counts up mid to high single digits. I imagine there's some lag effect to seeing that benefit is that fair to think about that as a lead indicator and driver during the 24. I think that is fair to look. I think I especially sense there's an accelerator there, Chris. You know, I've been in this job. I'm 10 years and for most of the years, technicians were growing at 1%, 1.1.

You put several years together are good if you can.

Go back and look at our numbers are up up up up up up up.

Speaker 5: You know, you're talking about quite a bit of the head and 100 Nases point OI margin.

You're talking about quite a bit of adding 100 basis point Oi margins to start it starts to work its way into the long term incentive as well so you're starting to see some of that play out in that situation. There are other things drips and drabs here, but I think for government work that's it.

Speaker 5: It starts to work its way into the long-term incentive as well. So you're starting to see some of that play out.

Speaker 6: There are other things, drips and draps here, but that, I think for government work, that's it. Got it. That's all.

Got it that's all I have thank you okay.

Speaker 2: Thank you and our final question today comes from Luke. Young, who is there. Please go ahead.

Thank you and our final question today comes from Luke.

Nicholas Pinchuk: That was just it. It was like a like a metric on 1.1, 1.1, 1.1. And now it's growing mid single digits. And so this has got to come in and accelerate for us. Because if want, there'll be more technicians and 2. The new guys need to tool up. Now, of course, that tool up takes on different shapes. So for example, they may not be buying the top of the line boxes right away.

Please go ahead.

Speaker 10: Good morning, things are taking the questions. A couple of margin related questions for me at the segment level. First of all, Nick, just if I look backwards in the tools group, there's just been a lot going on there in terms of material inflation, supply chain, product mix that's been variable, and it seems like those are things that could settle down into next year. And I guess I've set that against what's already been a step function change and profitability in the tools group. Do you see any key offsets or risks we should be thinking about going into next year, maybe normalizing price increases versus just building off of where the tools business is now and a normal margin progression into 2024?

Hi, Good morning, Thanks for taking my questions. A couple of margin related questions for me at the segment level first one Nick just if I look backwards in the tools group Theres just been a lot going on there in terms of material inflation and supply chain product mix, that's been variable and it seems like those are things that could settle down into next year.

Nicholas Pinchuk: They may be, they may be focused on on carts, which in fact, if you look at our tool storage business in the past quarter was heavily guided to carts. And so we're seeing some of that effect right now. But they do need to tool up. And one of the great things about it is we spent, I think we're in like thousands of schools around the country trying to make sure that people understand that the staff on brand is the most powerful brands and repair making student staff on customers for life. And I think we see that as they come out into a marketplace. So growing Texas music to our ears.

Hi, Seth.

That against what's already been a step function change in profitability in the tools group do you see any key offsets of risks we should be thinking about going into next year, maybe normalizing price increases versus just building off of where the tools business is now in sort of a.

Normal margin progression into into 2024.

Speaker 11: No.

No.

Speaker 12: I don't, I look, I think this time.

I don't I look I think this time.

Speaker 5: Material wasn't a major factor. Tools group was sort of over that. You know, and so I don't think...

Material wasn't a major factor tools group is sort of over that.

Operator: Thanks for all the color. Thank you.

You know and so I don't think you're going to see that.

Scott Stember: And our next question today comes from Scott Stumber with Roth MKM. Please go ahead. Welcome. Good morning, guys. Thanks for taking my question. Hey, within the tools. Can you just tell us how some of the sub segments did hand tools versus tool stores versus diagnostics in power tools? Yeah, look, I think I think the big, the big hole in this month was, was hand tools. I just cannot month quarter was hand tools.

Speaker 5: I think the tools group is just not a good, by the way, a lot of the things you mentioned.

I think the tools group is just not a good which by the way all of a lot of the things you mentioned like product mix that wasn't on every quarter and I've been here. It's been like this you know every quarters like that Theyre always a mix of things that happened in the tools group.

Speaker 12: like product mix and all that. That wasn't a new, it's all every quarter. Better here's been like this, you know? Every quarter's like that. There are always a mix of things that happen in the tools group.

Speaker 5: So, we just simply try to balance them so they drive things upwards. This quarter we got a nice dollop of good margin business. The handle business is pretty good. And by the way, you know, when you take a customer connection and you solve somebody's problems, that's why I try to talk about those two things. When you get the glow plugs out in a substantially shorter time, people want that and you get your margins for it.

Oh.

Just simply try to balance them. So they drive things upwards. This quarter, we got a nice dollop of good margin business. The handful of business are pretty good and by the way you know when you take a customer connection and you solve somebody's problems. So that's why I tried to talk about those two things when you get the glow plugs out and a substantially shorter time people want that and you get to you.

Scott Stember: Hand tools sold very well in the quarter. And so that, that was pretty strong diagnostics was off some after three good quarters. You know, and they didn't have a new, a new installation here and power tools was down somewhat because the, the stubby wasn't launched for sale until after the SFC. So that was really a back end phenomena given part of the great momentum in that situations. If you look at the back end, you would see power tools being a big factor in that situation because it's sold like, like wildfire, you know, like I said, the weight was worth it.

Margins for it it.

Speaker 5: It might seem arcane, you know, but that's the kind of stuff that gets you money. When you provide them a triple flex ratchet where they can use three different things and they're having problems getting around stuff, they'll pay you for it. And that kind of stuff works for us.

It might seem arcane.

But that's the kind of stuff that gets your money when you provide them a triple flex ratchet, where they can use three different things that are having problems getting around stuff they'll pay for it and that kind of stuff works for us. So most of I think one of the things that's been driving our margins in this period and all of the periods has been a relatively robust product.

Speaker 5: So most, I think one of the things that's been driving our march

Speaker 5: in this period and all the periods has been a relatively robust product activity. Now, one of the things that did happen, I think, fairly, is during the pandemic, when supply chains started to be a problem, we were focusing on our engineers on substitution.

Scott Stember: But we demonstrated at a SFC people were crowned around it, but we weren't selling it. We just wanted to create more pent up demand in that situation. Tool storage was down somewhat, but that was pretty much a substitution of, as I just said, of the, of the cards, which are lower, lower value per unit than the bigger units. And they take up a little more, a little more manufacturing space. So that, that kind of thing is what was in, was in tool storage. New units were pretty good, but revenues were a little lower because of them.

Activity now one of the things that did happen I think fairly is during the pandemic when supply chain started to be a problem, we were focusing on our engineers on substitution.

Speaker 12: Someone and took away a new chronic repair.

Somewhat and took away new product capacity.

Speaker 12: The engineers, the only have so many engineers, some of them are working on trying to find components that you can actually source so you can deliver. But now that that's all over, we can turn the engineers on new product again so the machine starts rolling at full speed. So we feel pretty good about.

Because the engineers that you only have so many engineers some of them are working on trying to find components that you can actually source. So it can deliver but now that that's all over we can turn the engineers on new product again, so the machine starts rolling at.

At full speed.

So we feel pretty good about this actually going forward.

Nicholas Pinchuk: Max, God and as far as sailed off the van versus into the van, you can say they pretty much followed the tools group, you know in terms of in terms of the numbers you saw in a tools group in general overall and the rise at the end of the quarter, you know, I think one of the things this time, I think we saw a lot of vacations, you know in some cases, you know like we always do that's why I say these quarters are squirrely. As a selling, the sell through was essentially the same as selling the same.

Speaker 10: thanks for that and then just a follow up on arson i just thinking about mix and that business so maybe i'm reading into this too much in which case uh... tell me if i am but under car equipment and that's been grown strong double digits for going to you know three years now finally low growth of high single digits this quarter i'm just thinking of sort of the mix of growth here between the software businesses and under car equipment and to what extent we might see more of that software for maybe shine through going forward things

Thanks for that and then just a follow up on arsenide, just thinking about mix in that business. So maybe I'm reading into this too much in which case tell me if I am under car equipment, I mean, thats been growing strong double digits for three.

Three years now.

<unk> growth up high single digits. This quarter I'm, just thinking of sort of the mix of growth here between the software businesses and under car equipment and to what extent, we might see more of that software mix shine through going forward. Thanks.

Wow.

Speaker 5: I don't know. I mean, I think we'd like to see the software myths go up. I mean, I think you're going to see that software is up nicely. I mean, Mitchell one had a better nice chord.

I don't know I mean, I think we'd like to see the software mix go up I mean, I think youre going to see that software was up nicely I mean Mitchell one had a nice quarter.

Nicholas Pinchuk: And then just the last housekeeping question, I saw the corporate expense up five plus million, what was that related to? Pretty much stock based compensation was a lot of it and part of that is, you know, okay, I think we're doing a little better this year than last year than just the basic year. [inaudible] up, up, up, up, up, up, up, up up, up, up, up, up, up[inaudible] . .

Speaker 12: If you wanted a great court, you know, people who repair shop owners or managers or whilers, and we see that building there. So we think we got that under with some great new adjustments and we got more coming.

<unk> had a great quarter, you know people that are repair shop owners and managers of lineups and we see that building. There. So we think we've got that on with some of them some great new adjustments and we got more coming.

Speaker 12: You got the diagnostics business, which will, I think as we move forward, new offerings will drive that business. And, but, under car equipment is lower profitability, but in the context of relative is...

You got the diagnostics business, which will which will I think as we move forward new offerings will will drive that business, you know and but under car equipment is lower is lower profitability, but in the context of <unk>.

Relative visit them.

Speaker 12: there and I believe an all-time high in profitability for them. So when you compare you over a year, you're getting a positive margin contribution from those guys.

I believe an all time high in profitability for them.

So when you compare year over a year, you're getting a positive margin contribution from those guys.

Speaker 12: So what we have here, I mean, I think the way forward is somewhat what you're talking about. The way forward for RS and I is more software. But also we believe we can raise the margins in things like the equipment business. Because we have been doing it and they're at an all time high now and going upwards. So we see those to be the two, I guess, factors in that situation.

So what we have here I mean, I think the way forward is somewhat what youre talking about the way forward for us and I as more software, but also we believe we can raise the margins and things like the equipment business.

Because we have been doing it and they're at an all time high now and going upwards. So we see those to be the two.

Factors in that situation.

Speaker 12: uh... so that's what i see so i think pretty good things but look you know arson i with good sales equipment with good strong sales equipment what were they twenty four point three percent up a hundred and thirty basis points

So that's where I see so I think pretty good things, but look you know our C&I with good sales and equipment with.

With good strong sales in equipment.

What were they 24, 3% up 130 basis points.

It's not chopped liver.

Speaker 12: And also they seem to be able to keep improving. Go back and look at the results. They keep going upwards.

So they seem to be able to keep improving and go back and look at the results that keep going upwards.

I think that'll continue.

Speaker 10: Okay, I'll, yeah, leave it there. Thanks for that comment on the equipment margins. That's helpful, Nick.

Okay I'll leave it there. Thanks, thanks for that comment on the equipment margins Thats helpful. Nick.

Speaker 2: Thank you and ladies and gentlemen, it's included in question or answer session. I'd like to turn the conference back over to Sarah Burce, see if we're closing remarks.

Thank you and ladies and gentlemen. This concludes our question and answer session I would like to turn the conference back over to server SKU for any closing remarks.

Speaker 3: Thank you all for joining us today. I replay this call of the available shortly on snapon.com. As always, we appreciate your interest in snapon. Good day.

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 in snap on good day.

Speaker 2: Thank you. This includes today's Trumpist call. We thank you all for attending today's presentation. You may now be switch alarms and have a wonderful day.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Yeah.

[music].

Speaker 1: I.