Q1 2024 Snap-on Inc Earnings Call

Operator: Good morning, and welcome to the Snap-On Incorporated 2024 first quarter results conference call. All participants will be in listen only mode.

Good morning, and welcome to the snap on incorporated 2024 first quarter results conference call.

All participants will be in listen only mode.

Operator: And should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your telephone keypad.

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

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Operator: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Please note this event is being recorded.

Speaker Change: Now I'd like to turn the conference over to Sarah verb Ski Vice President Investor Relations. Please go ahead.

Sara M. Verbsky: Thank you, Gary, and good morning, everyone. We appreciate you joining us today as we review Snap-On's first quarter results, which are details 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.

Speaker Change: Thank you Gary and good morning, everyone. We appreciate you joining us today as we review snap ons first 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 although probably are a snap ons Chief financial officer, Nick will kick off our call. This morning with his perspective on our.

Nicholas T. Pinchuk: 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 the 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.

Sara M. 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 in the Webcast Viewer, as well as on our website, snapon.com, under the Investor section.

Sara M. Verbsky: 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 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 the forward-looking statements are contained in our SEC filings.

Nicholas T. Pinchuk: 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 are 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 cause.

Nicholas T. Pinchuk: Cause our results to differ materially from those in the forward looking statements are contained in our SEC filings. Finally this presentation includes non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our earnings release issued today.

Sara M. Verbsky: 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 issued today, which can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Nicholas T. Pinchuk: 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.

Nicholas T. Pinchuk: Thanks, Sarah. Good morning, everybody. As usual, I'll start with the highlights of our first quarter. I will provide my perspectives on the results, on our markets, and our path ahead. After that, Aldo will give you a detailed review of the finances. We believe that our first quarter once again demonstrated Snap-On's ability to maintain its strength, to withstand headwinds, to manage challenges, and to leverage the multiple opportunities of our market. Looking at the results in total, we are encouraged.

Nicholas T. Pinchuk: Good morning, everybody.

Nicholas T. Pinchuk: As usual I'll start with the highlights of our first quarter I'll provide my perspectives on our results on our markets and our path ahead. After that Aldo will give you a detailed review of the financials.

Nicholas T. Pinchuk: We believe that our first quarter once again demonstrated snap ons ability to maintain its strength to engage headwinds to manage challenges and to leverage the multiple opportunities of our markets looking at the results. In total we are encouraged like most quarters, we had turbulence from geography to geography.

Nicholas T. Pinchuk: Like most quarters, we had turbulence from geography to geography and from operation to operation. North America was mixed, but we made significant gains in critical industries. Internationally, our consolidated results were also mixed, but yielding overall positive results as our operations in Europe and Asia overcame the effects of recessions in Europe and the delayed recovery in China. Now the results. First quarter sales were $1,182.3 million, about flat to last year. On an organic basis, excluding $6.7 million from acquisitions and $2.5 million from favorable foreign currency, our sales were lower by 0.8%.

Nicholas T. Pinchuk: And from operation to Operation North America was mixed but with significant gains in critical industries internationally. Our car consolidated results were also mix mixed but yielding overall positives as our operations in Europe, and Asia overcame the effects of recessions in Europe, and the delayed recovery in China.

Speaker Change: Now the results.

Speaker Change: First quarter sales were 1 billion, while our agent 3 million about flat to last year on an organic basis, excluding $6 7 million from acquisitions and $2 5 million from favorable foreign currency. Our sales were lower by <unk>, 8% uncle, Oh, why was 279 $270 9 million an increase of 11.

Nicholas T. Pinchuk: OpCo OI was $270.9 million, an increase of $11.1 million, and the OpCo operating margin for the quarter was 22.9%, up 90 basis points. Now both those numbers benefited from the legal payment referenced in our release, but with or without that legal flow, our first quarter OpCo OI and the margin were among our best. It's a strong statement given the turbulence of the day. Financial Services. Operating income grew to $68.3 million from last year's $66.3 million.

Speaker Change: $1 million in the Opco operating margin for the quarter was 22, 9% up 90 basis points.

Speaker Change: Now both those numbers benefited from the legal payment referenced in our release.

Speaker Change: But.

Speaker Change: But with or without that legal flow, our first quarter Opco Oi margin Oi and the margin were among our best.

Speaker Change: It's a strong statement given the turbulence of the day.

Speaker Change: Financial services operating income grew to $68 3 million from last year's $66 3 million and the result, combined with Opco to raise our consolidated operating margin to 26, 5% up over up over the 25, 6% recorded last year and EPS. It.

Nicholas T. Pinchuk: And the result, combined with OPGO, raised our consolidated operating margin to 26.5%, up over the 25.6% recorded last year. It was $4.91, including a per share benefit from a legal payment of $0.16, but up $0.31, or 6.7% from last year. So those are the numbers. Now, let's turn to the markets and the trends we're seeing as we connect with our customers. From an overall perspective, we believe the automotive repair arena remains favorable.

Speaker Change: It was $4 91.

Speaker Change: Including a per our per share benefit from a legal payment up 16 cents.

Speaker Change: But up 31 cents or six 7% from last year. So those are the numbers.

Speaker Change: Now, let's turn to the markets and the trends, we're seeing as we connect with our customers.

Speaker Change: From an overall perspective, we believe the automotive repair arena remains favorable vehicle OEM and dealership continue investing in tools and equipment preparing for the tie to new model, bringing the latest technologies and drivetrains to the market.

Nicholas T. Pinchuk: Vehicle OEMs and dealerships continue investing in tools and equipment, preparing for the tide of new models, bringing the latest technologies and drivetrains to the market. And in the quarter, our Repair Systems and Information Group, or RS&I, as we call it, expanded its reach into OEM programs and took advantage of opportunities throughout its global footprint. And as we look forward, we see further prospects for RS&I capitalizing on that trend, supplying dealerships and independent garages with just the products they need to face the wave of modern platforms that are coming. So the sharps are strong.

Speaker Change: And in the quarter, our repair systems, and information group or Arts and I as we call. It expanded our reach into OEM programs and took advantage of the opportunities throughout its global footprint and as we look forward, we see further prospects for us and I capitalizing on that trend supplying dealerships and independent garages with just the products they need to confront.

Speaker Change: The wave of modern platforms that are coming.

Speaker Change: So the shops are strong.

Nicholas T. Pinchuk: Now let's speak of the tech. The guys and gals that twirl the wrenches, punch the keys, or tap the screens. This quarter I had multiple opportunities to visit with franchises, and the report was generally that shops are humming, the bays are running at full capacity, and all that mirrors what the macro data says nationally. The car park is continuing to age, now at an average of 12 and a half years, and I think it is moving up.

Speaker Change: Now, let's speak of the technician.

Speaker Change: The guys and gals at towards the wrenches punch, the keys or tap the screens this quarter, Ed I have multiple occasions to visit with franchisees and and the report was generally the shops are humming. The bays are running at full capacity and all of that mirrors, what the macro data says naturally the car park is continuing to age.

Speaker Change: Now at an average of 12 and a half years and I think moving up technician wages are rising and the hours worked are increasing we believe it all signals ongoing and robust demand for repair.

Nicholas T. Pinchuk: Technician wages are rising, and their hours worked are increasing. We believe it all signals ongoing and robust demand for repair, and you know it's true. The activity is strong.

Speaker Change: And you know it's true.

The activity is strong.

Nicholas T. Pinchuk: But there is a difference between the industry overview and the technician outlook for the future. And by extension, they're purchasing sentiment. The barrage of bad news. Inflation, two wars, the border, the Red Sea, the elections. The Uran Bombing. For the people of work, the fear of what's coming around the corner impacts the outlook. And paraphrasing the characters of Dune, fear is the outlook killer. It erodes

But there is a difference between the industry overview and the technician outlook for the future and by extension repurchasing sentiment.

Speaker Change: The barrage of bad news inflation towards the border the Red Sea the election.

Speaker Change: Iran bombing.

Speaker Change: For the people of work.

Speaker Change: Fear of what's coming around the corner impacts the outlook and paraphrasing the characters as of June here is the outlook killer.

Speaker Change: It erodes confidence takes a well positioned and they continue to invest but it's been a quick payback items that will make a difference right away, but don't require a long term payment stream.

Nicholas T. Pinchuk: The techs are well-positioned, and they continue to invest, but it's in quick payback items that will make a difference right away but don't require a long-term payment. And in response, we continue to redirect the tools group's focus in our design efforts, in our facility capacity, and in our selling and marketing efforts, working to match the current customer preference. So that's the auto repair. Now a commercial industrial group, or what we call C&I, serving critical industries and the most international of all our groups. And in the quarter, CNI manages the difficult challenge of balancing multiple economies that are in economic turbulence. You know, Europe now has.

Speaker Change: And in response, we are continuing to to redirect that we continue to redirect the pool Tucows pools group focus in our design efforts and are totally capacity and our selling and marketing efforts working to match the current customer preference.

Speaker Change: So that's the auto repair now our commercial industrial group or what we call C&I, serving critical industries and the most international of all our groups and in the quarter C&I manages the difficult challenge of balancing multiple economies that are an economic turbulence.

Speaker Change: You know Europe now had.

Nicholas T. Pinchuk: More than half a dozen countries are in a technical recession, and then China and the Chinese environment, including the nearby countries, depending on it, they continue to struggle. India, on the other hand, is booming. Modi has the train running, so that's a positive in Asia amidst some very difficult economic conditions. So that's the geography.

Speaker Change: More than half a dozen countries and technical recession, and then China, and the China environment, including the nearby countries, depending on it they continue to struggle.

Speaker Change: On the other hand.

Speaker Change: Moody has the train running so that's a positive in Asia amidst some very difficult economies.

Speaker Change: So that's the geography, so now let's focus on the sectors.

Nicholas T. Pinchuk: Now let's focus on areas like aviation. You know, you don't have to read the paper very long to realize there's a significant focus on aerospace production and repair, where the price for failure is high. And that industry is increasing demand for our precision torque products and for our asset control solutions to improve safety and productivity. In addition, in that sort of critical arena, custom kits, matching a set of items to a particular task, remain an important business, especially for the military, both domestically and internationally.

Speaker Change: Areas like aviation continues to be strong.

Speaker Change: You don't have to read the paper very long to realize there was a significant focus on aerospace production and repair where the price for failure is high.

Speaker Change: In that arena is increasing demand for our precision torque products and for our asset control solutions to improve safety and productivity.

Speaker Change: In addition in that sort of critical arena custom kits matching instead of items to a particular task remains an important business, especially for the military both domestically internationally and with that critical industries is a substantial opportunity and we are investing expanding capacity, adding new products either organically.

Nicholas T. Pinchuk: And with that, critical industries are a substantial opportunity. And we are investing, expanding capacity, adding new products either organically or through the acquisitions we've made over the last few years. We're fortifying our runways for growth, extending outside the garage, and we know it's paying off. So overall, the quarter was favorable despite the headwinds.

Speaker Change: Through the acquisitions, we made over the last few years.

Speaker Change: We're fortifying our runways for growth extending outside the garage.

Speaker Change: And we know it's paying off.

Speaker Change: So overall the quarter was favorable despite the headwinds tools group pivoting rsi, expanding with Oems C&I extending beyond the garage solving the critical I mean.

Nicholas T. Pinchuk: Tools group pivoting, RSI expanding with OEM, C&I extending beyond the garage, solving the critical. And the OPCO OI percentage demonstrated once again the power of Snap-On's value creation processes, safety, quality, customer connection, innovation, and rapid continuous improvement. Developing innovative solutions that are born out of insight and observations right in the workplace. This understanding, melded with RCI, helps Snap-On to once again hold fast in the turbulence of the day. Well, that's the macro overview. Now, let's move to the segment. Unknown Attendee in the CNI

Speaker Change: I'll go a Y percentage demonstrated once again the power of snap on value creation processes safety quality customer connection innovation and rapid continuous improvement.

Speaker Change: Developing innovative solutions that are born out of insight and observations right in the workplace.

Speaker Change: Misunderstanding melded with RCI help snap onto once again hold fast and the turbulence of the day.

Speaker Change: Well, that's the macro overview now let's move to the segments.

Speaker Change: In the C&I group.

Nicholas T. Pinchuk: Sales were $359.9 million, which represented a decrease of $3.9 million, or 1.1%, and that included $6.7 million in acquisitions, acquisition-related sales, $1.4 million in unfavorable foreign currency, and an organic decline of 2.5%. It all reflects higher activity with customers in critical industries, more than offset by weakness in Asia-Pacific and in our power... From an earnings perspective, C&I operating income was $55.4 million, which was about The operating margin was 15.4%, up 10 basis points, and that was despite 30 basis points of headwind from currency and the acquisition. Within the quarter, the demand for custom kits addressing particular critical tasks remained nicely robust, with increased demand for air-to-control solutions like our automatic tool control product. It was a nice, bright spot in Seattle.

Speaker Change: Sales were $359 9 million, representing a decrease of $3 9 million or one 1% and that includes $6 7 million.

Speaker Change: Million in acquisitions acquisition related sales $1 4 million and unfavorable foreign currency and an organic decline of two 5%. It all reflects higher activity with customers in critical industries more than offset by weakness in Asia Pacific and our power tools.

Speaker Change: From an earnings perspective, C&I operating income was $55 4 million that was about the same as last year. The operating margin was 15, 4% up 10 basis points and that was despite 30 basis points of headwind from currency and the acquisitions.

Speaker Change: Within the quarter the demand for custom kits addressing particular critical tasks remain.

Speaker Change: <unk> nicely robust with increased demand for risk control solutions like our automatic tool control products.

Speaker Change: It was a nice bright spot in C&I on the other hand power tools was down in the quarter, but help is on the way.

Nicholas T. Pinchuk: On the other hand, Power Tools was down in the quarter, but help is on the way. Two new power tool models born out of customer connection were recently introduced, each fulfilling specific needs for each fulfilling specific needs. For repair garages, we launched the PH-3045B air hammer. This is a tool that replicates the effect of swinging a hammer and hitting a chisel, except the device hurls the hammer 3,500 times a minute. Vehicles are filled with components like ball joints, wheel bearings, and suspension bushings that are packed in tight spaces for maximum efficiency.

Speaker Change: Tuning flower tool models born out of customer connection, we recently introduced each fulfilling specific needs for each fulfilling specific needs.

Speaker Change: For repair garages, we launched the ph 30, 45, B Air Hammer this as a tool it replicates the effect of swinging a hammer and hitting a chisel, except the device hurdles the hammer 3500 times a minute.

Speaker Change: Vehicles are filled with components like ball joints wheel bearing suspension bushings that are packed in tight fits for maximum efficiency. This assembly can be a bear.

Nicholas T. Pinchuk: Disassembly can be a bear. We know this from being in the garage. Well, with our new air hammer, the easy-to-use retainer securely holds the chisel in place while the piston sledgehammers away. It's powerful, but at the same time, the compact two-inch barrel enables access in tight spaces, delivering tremendous power, speed, and energy with an unlimited run time. It's a real productivity enhancer, but the essential feature, born out of watching the technicians in the shop, is the best-in-class vibration reduction created by special elastomer shocks, allowing the mechanic to pound away at seized suspension components without fatigue or pain. No more sore arms from hammer work.

Speaker Change: We know this from being in the garage well with our new Air Hammer the easy to use retainer securely holds the chisel in place while the pistons sledge ammers away, it's powerful but at the same time the compact two inch barrel.

Speaker Change: Two inch barrel enables a access in tight spaces, delivering tremendous power speed and energy.

Speaker Change: With unlimited runtime.

Speaker Change: It's a real productivity enhancer, but the essential feature born out of Washington, and technicians in the Sop is the best in a best in class vibration reduction created by special elastomer shocks, allowing a panicked pound away. It seems suspension components without the T or paying no more sore arms from Hammer work the new Hammer was introduced late.

Nicholas T. Pinchuk: The new hammer was introduced late in the quarter, and techs have already noticed it. Also in Power Tools, our cordless portfolio expanded with the introduction of a new 18-volt nibbler designed for collision repair and metal fabrication. It's a big time saver. It speeds up work that, you know, once involved hand shears or other devices helping technicians cut any free-form shape conceivable out of tough sheet metal. Again, the design resulted from customer connection, from watching the tech struggle with shears.

Speaker Change: In the quarter and techs have already noticed.

Speaker Change: Also on power tools, our cordless portfolio expanded with the introduction of a new 18 volt nibbler designed for collision repair and metal fabrication and so big time saver. It speeds up work that you know once involved Hans shares or other device helped the technician cut any sleep warm shaped conceivable out of top sheet metal.

Speaker Change: Again, the design resulted from customer connection from watching the tech struggle with shares are an enabler makes a big difference when putting in defenders extracting a damaged panel or cutting a ceiling of a car accommodating installation of a son or creating a place anywhere in the vehicles for placing emergency lighting shining away.

Nicholas T. Pinchuk: Our new Nibbler makes a big difference when cutting into fenders, extracting a damaged panel, or cutting the ceiling of a car, accommodating the installation of a sunroof, or creating a place anywhere in the vehicle for placing emergency lighting, shining the way for first responders.

Speaker Change: For first responders I have to tell you what I have.

Nicholas T. Pinchuk: I have to tell you, I have to tell you, we're encouraged by these innovative new products and by all the others we're planning to introduce as the days go forward. We know they will work, and they all will make a difference right away, confronted with international headwinds, strong momentum in domestic markets, led by critical industries extending out of the garage with growing strength. Now, let's talk about the tools group. The first quarter for the tools group was below our standard. However, we do remain confident, and we do see a pivot to focus on quick payback items registering positive momentum and movement. Sales in the quarter were $500.1 million, including an organic decrease of 7%.

Speaker Change: To tell you we're encouraged by these innovative new products and by all the others were planning to introduce as the days go forwards, we know work and they all will make a difference right away.

Speaker Change: C&I.

Speaker Change: Quarter confronted with international headwinds strong momentum in domestic markets led by critical industries extending out of the garage with growing strength.

Speaker Change: Now, let's talk about the tools group.

Speaker Change: The first quarter for the tools group was below our standards.

Speaker Change: However.

Speaker Change: We do remain confident and we do see a pivot to focus on quick payback items registering a positive momentum.

Speaker Change: The momentum in removing.

Speaker Change: Sales in the quarter were $500 1 million and including in it.

Speaker Change: Reflected in an organic decrease including a an organic decrease reflecting an organic decrease of 7%. The groups operating income margin was 23, 5% down 100 basis points.

Nicholas T. Pinchuk: The group's operating income margin was 23.5%, down 100 basis points. Notably, gross margin in the quarter rose 90 basis points, reaching 48.2%. You see, shorter payback arguments aren't shorter in profitability. During the quarter, we worked to redirect our plans, guide our franchisees to innovative solutions that drive productivity, and we kept engaging our customer connection, observing the tasks executed in the Bay and using the insights to design and deploy innovative and focused products.

Speaker Change: Notably gross margin in the quarter Rose 90 basis points, reaching 48, 2% you see shorter payback arguments arent shorter on profitability.

During the quarter, we work to redirect our plants guide our franchisees to innovative solutions that drive productivity and we kept engaging our customer connection observing the task executed in the bay and using the insights to design and deploy innovative and focused products.

Nicholas T. Pinchuk: Offerings that are dedicated to making work easier, like two new products that engineers have just engineered to address time-consuming tasks where simple repairs are made complex by limited accessibility or by seized components that slow the work to a snail's pace. You can see it in the garage. For instance, on General Motors 6L80 and 8L80-90 transmissions, the valve body bolts are obstructed by the exhaust setup, making it very difficult to do this job with a standard ratchet or socket combination.

Speaker Change: Offerings that are dedicated to making work easier like two new products. Just engineers, just engineered too to address time consuming task with simple repairs were made complex by limited accessibility made complex by limited accessibility whereby sees components that slow a little work to a snail's pace you.

Speaker Change: You can see it in the garage.

Speaker Change: For instance on General Motors are six L. A D and E. The Lady 90 transmissions. The valve body bolt bolts are are obstructed by the exhaust setup, making it very taxing to do this job with a standard ratchet Osaka combination.

Nicholas T. Pinchuk: We were in some of those GM garages and observed the problem firsthand. Classic customer connection and the innovation that followed, in our quarter-inch drive Torx Plus EPL-10 low-profile inverted socket. That's a mouthful.

Speaker Change: We were in some we were in some of those GM garages and observe the problem firsthand classic customer connection.

Speaker Change: And the innovation that followed.

Speaker Change: In our quarter inch drive torque towards plus EPL 10, low profile inverted socket, that's a mouthful.

Nicholas T. Pinchuk: That innovation was released in the first quarter, and it does make GM transmission work easier. The new cushion design precisely maneuvers, the new custom design precisely maneuvers between the exhaust assembly and the transmission and locates the fastener in such a way that provides enough clearance for a ratcheting box or box wrench, a box end wrench, or a hand ratchet to access the bolts for easy removal with no exhaust disassembly Saving more than 45 minutes per repair right away.

Speaker Change: That innovation was released in the first quarter and it does make GM transmission work easier the new kitchen design precisely maneuver the new custom design precisely maneuvers between the exhaust assembly and a transmission engaging the fastener.

Speaker Change: In such a way that provides enough clearance for a ratcheting box or box wrench box end wrench or a hand ratchet access the bolts were easily removal with no exhaust this assembly required saving more than 45 minutes per repair right away.

Nicholas T. Pinchuk: Techs working on GM transmissions can complete more work with this device and make more money. They can do that right away, for quick payback. Another example we saw, another example of that was that removing the brake caliber pins on Toyota trucks and sports utility vehicles was very difficult. The pins on 4Runners, Tacomas, and Tundras are exposed to harsh road environments, often causing the parts to become immovable, regularly requiring heat or excessive force to free the restrictive fasteners.

Speaker Change: Texts working on GM transmissions can complete more work.

With this device.

Speaker Change: And make more money.

Speaker Change: They can do that right away.

Speaker Change: Payback. Another example, we saw another example of that was we saw that removing the brake caliber pins on Toyota trucks and sports utilities was very difficult the pins on floor runners to comas and tonnages are exposed are exposed to harsh road environments, often causing the parts to become immovable regularly.

Speaker Change: Requiring like heat or excess of forced to free the restricted fasteners and each of those matches requires time and it raises the risks of damage to nearby components, often elevating the complexity the repair taking a lot more time watching the work our engineers pushed the unique punch like bit that precisely alliance and air.

Nicholas T. Pinchuk: And each of those methods requires time, and it raises the risk of damage to nearby components, often escalating the complexity of the repair, taking a lot more time. Watching the work, our engineers designed a unique punch-like bit that precisely aligns an air hammer with the dimensions of the pin, maximizing the extraction force without endangering the surrounding systems. Once again, simplifying the task and freeing the tech to move on to other jobs

Speaker Change: Hammer with the dimensions of the pin maximizing the extraction force without endangering the surrounding systems. Once again, simplifying the task and freeing the tech to move on to other jobs. So another quick payback item. That's now available in popular finally in the quarter, we expanded our only the one V only U S made locking.

Nicholas T. Pinchuk: Finally, in the quarter, we expanded the only U.S.-made locking plier lineup by releasing two new models, the LP5LN, constructed with a tapered nose that's ideal for additional reach inside confined spaces to easily access narrow workpieces, and the new LP5WC, delivering reliable gripping power to difficult-to-engage round objects like hoses. Beyond the special features of those two models, the full line offers... Our subcompact 6-inch plier line offers increased accessibility because it's small, enabling techs to maneuver in crowded engine compartments and under the dash.

Speaker Change: <unk> lineup by releasing two new models the L. P five L and constructed with the taper knows.

Speaker Change: Deal for additional reach inside compliance space to easily access narrow work pieces and the new LP <unk> WC, delivering a reliable gripping power power to difficult to engage round objects like hoses.

Speaker Change: Beyond the special features of those two models.

Speaker Change: The full line.

Speaker Change: Offers.

Speaker Change: <unk> com.

Speaker Change: <unk> six inch Plier line offers increased accessibility of neat because it's small enabling text of maneuver in crowded engine compartments and under the dash. The designs are the designs also provides unmatched clamping forces.

Nicholas T. Pinchuk: The designs also provide unmatched clamping force, that locking pliers, unmatched clamping forces that will not slip under load with the locking mechanism. The pliers also serve as a second pair of hands. You can lock them up, holding material securely in place, freeing up the technician's hands to complete another step in the repair.

Speaker Change: Locking pliers unmatched clamping forces that will not slip under low with the locking mechanism. The players also serve as a second pair of hands you can lock them up locking up holding material securely in place freeing up you up the technician hands to complete another step in the repair and.

Nicholas T. Pinchuk: And each unit, each of those locking plier units, is forged and produced on an Elkmont, Alabama plant, and they're the only locking models made in the U.S. Well, that is the tools, pivoting to match the technician's current preferences and needs, wielding our customer connections, deploying solutions that improve efficiency by making tasks now are, The Arsenide Group's results confirmed, I think. What we've been saying all along, Snap-On is well-positioned to support repair shops, both dealers and the vast networks of independent shops.

Speaker Change: Each unit each of those locking Plier unit is forged and produced our album on Alabama plant and they're the only locking models made in the U S.

Speaker Change: Well that is the tools group pivoting to match the technicians current preferences and needs wielding our customer connections deploying solutions that improve his efficiency by making path easier.

Speaker Change: Now our F&I.

Speaker Change: Your F&I group's results confirms I think.

Speaker Change: What we've been saying all along snap on is well positioned to support repair shop, both dealers and the best networks of independent shops, and in that regard ours and ice sales in a quarter, where reported $63 8 million up $17 2 million or three 9% versus last year with an organic sales increase of three 3% operating earnings for the group reached.

Nicholas T. Pinchuk: And in that regard, RS&I sales in the quarter were $463.8 million, up $17.2 million, or 3.9% versus last year, with an organic sales increase of 3.3%. Operating earnings for the group reached $112.9 million, reflecting an increase of $8.3 million, or 7.9% versus last year. The operating income margin was 24.3%, rising by 90 basis points.

Speaker Change: The $112 9 million, reflecting an increase of $8 3 million or seven 9% versus last year. The operating income margin was 24, 3% rising by 90 basis points.

Speaker Change: A powerful performance driven by OEM related activity and sales in the under car.

Speaker Change: Helping shops prepare for new technologies.

Nicholas T. Pinchuk: A powerful performance, driven by OEM-related activity and sales in the undercar, helping shops prepare for new technology. You know, in terms of OEM-related activity in sales and undercar, helping shops prepare for new technologies and enabling system upgrades in the growing collision market. We continue to see abundant runways for growth in RS&I, and we're working to take advantage of them. One example of that is the launch of our new heavy-duty repair information software. This package combines the vehicle interface capabilities of our NEXIC heavy-duty diagnostic units with the horsepower of our Mitchell-1 information database.

Speaker Change: Terms of OEM related activity and sales in under car, helping shops prepare for new technologies are enabling system upgrades and the growing collusion market. We continue to seek to clearly see abundant runways for growth in RF and I and we're working to take advantage of but one example of that is the launch of our new heavy duty repair information software.

Speaker Change: Packaged combines the vehicle interface capabilities of our <unk> heavy duty diagnostic units with the horsepower of our Mitchell one information database, it's an innovative solution for repairing heavy duty industry, which over the past decade has seen an explosion of new technologies relating to sophisticated emission control along with advanced computer in electrical and at net.

Nicholas T. Pinchuk: It's an innovative solution for the repair and heavy-duty industry, which over the past decade has seen an explosion of new technologies relating to sophisticated emission control, along with advanced computer and electrical networks that all combine to present heavy mechanics with complex and complicated repair tasks. Now, the solutions are here. The solution is all located in one spot. Tests can search by VIN number and access operating specifications, troubleshooting tips, and interactive wiring diagrams, all big, specific to the particular vehicle, all big time savers.

Speaker Change: It works at all combines to present heavy mechanics.

Speaker Change: Complex and complicated repair test.

Speaker Change: Now the solutions now.

Speaker Change: With solutions all located in one spot tests can search by Vin number and axis operating specification troubleshooting tips and interactive wiring diagram diagrams, all big it's specific to a particular vehicle all big time savers.

Speaker Change: Enterprise is deployed in the quarter and it's a it's a groundbreaking integrated platform that combines diagnostic capability together with vehicle information, it's very powerful and I can tell you the heavy duty industry has noticed.

Speaker Change: You can see it in the <unk> numbers.

Nicholas T. Pinchuk: This new product was deployed in the quarter, and it's a groundbreaking integrative platform that combines diagnostic capability with vehicle information. It's very powerful, and I can tell you, the heavy duty industry has noticed. You can see it in the RSI number.

Speaker Change: And in the quarter, our diagnostic Division also released its latest 24 that two software upgrade expanding our broad range of vehicle coverage in test procedures throughout all our existing hardware the new upgrade strengthens our already.

Nicholas T. Pinchuk: And in the quarter, our Diagnostic Division also released its latest 24.2 software upgrade, expanding our broad range of vehicle coverage and test procedures throughout all our existing hardware. The new upgrade strengthens our already... market-leading data. Technicians get access to our SureTrack vehicle-specific real fixes, repair tips, and commonly replaced parts. All derived from our proprietary database of 2.7 billion repair actions and 355 billion data records. Unmatched insight. Not only to interpret what the vehicle trouble codes are saying but to uniquely use the information to determine the exact problem.

Speaker Change: Market, leading data position.

Speaker Change: Technicians get access to to our short track vehicle specific real fixes repair kits and constantly replace parts all derived from our proprietary database of $2 7 billion repair actions and 355 billion data records unmatched insight not only to interpret what the vehicle trouble codes are same.

Speaker Change: So a uniquely use the information to determine the exact problem analyzing millions of data lines per car predicting the most likely repair snap on uniquely provides this capability and then this latest update we continue adding new models and functionalities, making our proprietary software position, even more effective and more.

Speaker Change: Powerful.

Speaker Change: We're confident in the strength of ours, and we keep driving to expand its positions with repair shop owners and managers to make by making work easier with more and more great new products.

Nicholas T. Pinchuk: Analyzing millions of data lines per car, predicting the most likely repair. Snap-On uniquely provides this capability, and in its latest update, we continue adding new models and functionalities, making our proprietary software position even more effective and more powerful. We're confident in the strength of RS&I, and we keep driving to expand its positions with repair shop owners and managers to make work easier with more and more great new products. Well, that's Snap-On's first quarter.

Speaker Change: Well that snap ons first quarter sales flat overcoming significant headwinds critical industries advancing again.

Speaker Change: Tools group pivoting matching the preference for quick payback products OEM under car repair information market is remaining robust the opco Oi margin of 22, 9% up 90 basis points and an EPS of $4 91.

Speaker Change: Strong results that overcame the headwinds.

Speaker Change: And benefited from a legal outcome.

Nicholas T. Pinchuk: Sales flat, overcoming the significant headwinds, critical industries advancing again, the tools group pivoting, matching the preference for quick payback products, OEM under carbon repair information markets remaining robust, the OPCO OI margin 22.9%, up 90 basis points, and an EPS of $4.91. Strong results that overcame the headwinds and benefited from a legal out, All demonstrating strength in the midst of turbulence. It was an encouraging quarter. Now, I'll turn the call over to Aldo. Aldo?

All demonstrating the strength and the strength in the midst of turbulence.

It was an encouraging quarter.

Speaker Change: Now I'll turn the call over to Aldo Aldo Thanks, Nick our consolidated operating results are summarized on slide six net sales of $1 billion $182 $3 million in the quarter compared to $1 billion $183 million last year.

Aldo: Electing eight tenths of 1% organic sales decline, partially offset by $6 7 million of acquisition related sales and $2 5 million of favorable foreign currency translation.

Aldo: Activity in our automotive repair markets was mixed gains in sales to OEM and independent shop owners and managers were more than offset by lower sales to technicians through our franchise van channel.

Aldo J. Pagliari: Thanks Nick. Our consolidated operating results are summarized on slide 6. Net sales of $1,182,300,000 in the quarter compared to $1,183,000,000 last quarter, reflecting an 8 tenths of 1% organic sales decline, partially offset by $6.7 million of acquisition-related sales and $2.5 million of favorable foreign currency translation. Activity in our automotive repair markets was mixed. Gains in sales to OEM and independent shop owners and managers were more than offset by lower sales to technicians through our franchise van channel.

Aldo: Within the industrial sector for our C&I group sales.

Sales to customers in critical industries were up mid single digits in the quarter as compared to last year.

Aldo: Consolidated gross margin of 55% improved 70 basis points from 49, 8% last year, primarily reflecting benefits from lower material and other costs and savings from the company's RCI initiatives.

Aldo: Operating expenses as a percentage of net sales of 27, 6% compared to 27, 8% last year.

Aldo: In the quarter as noted in our press release operating expenses included an $11 $3 million benefit for payments received associated with a legal matter.

Aldo J. Pagliari: Within the industrial sector, or our C&I group, sales to customers in critical industries were up mid-single digits in the quarter as compared to last year. Consolidated gross margin of 50.5% improved 70 basis points from 49.8% last year, primarily reflecting benefits from lower material and other costs and savings from the company's RCI initiatives. Operating expenses were a percentage of net sales of 27.6% compared to 27.8% last year. In the quarter, as noted in our press release, operating expenses included an $11.3 million benefit for payments received associated with a legal matter.

Aldo: 20 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payments, partially offset by increased personnel and other costs, which include a 20 basis point impact from acquisitions.

Operating earnings before financial services of $270 9 million in the quarter, including the benefit from the legal payments compared to $259 $8 million in 2023.

Aldo: As a percentage of net sales operating margin before financial services of 22, 9% compared to 22% last year.

Aldo: Financial services revenue of $99 $6 million in the first quarter of 2024 compared to $92 $6 million last year, while operating earnings of $68 3 million compared to $66 3 million in 2023.

Aldo J. Pagliari: The 20 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payment, partially offset by increased personnel and other costs, which includes a 20 basis point impact from acquisition. Operating earnings before financial services of $270.9 million in the quarter, including the benefit from the legal payment, compared to $259.8 million in 2023. As a percentage of net sales, operating margin before financial services of 22.9% compared to 22% last year, Financial Services revenue of $99.6 million in the first quarter of 2024 compared to $92.6 million last year, while operating earnings of $68.3 million compared to $66.3 million in 2023.

Aldo: Consolidated operating earnings of $339 2 million, which included the legal benefit compared to $326 $1 million last year.

Aldo: As a percentage of revenues the operating earnings margin of 26, 5% compared to 25, 6% in 2023, our first quarter effective income tax rate of 22, 2% compared to 23, 1% last year.

Aldo: Net earnings of $263 5 million or $4 91 per diluted share, including an $8 $8 million or 16 cents per diluted share after tax benefit from the legal agreement compared to $248 7 million or $4 60 per diluted share in the first quarter of 2023.

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

Aldo: Sales of $359 $9 million compared to $363 $8 million last year, reflecting a two 5% organic sales decline and a $1 4 million of unfavorable foreign currency translation, partially offset by $6 7 million of acquisition related sales.

Aldo: The organic decrease was primarily due to a double digit reduction in the power tools business and a high single digit decline in the segment's Asia Pacific operations, mostly associated with lower intersegment sales.

Aldo J. Pagliari: Consolidated operating earnings of $339.2 million, which included the legal benefit, compared to $326.1 million last year. As a percentage of revenues, the Operating Earnings Margin of 26.5% compared to 25.6% in 2023. Our first quarter effective income tax rate of 22.2% compared to 23.1% last year.

Aldo: These declines were partially offset by a mid single digit gain in sales to customers in critical industries.

Aldo: With respect to critical industries military and defense related sales were robust as was activity in the aviation sector.

Aldo: Gross margin improved 200 basis points to 48% in the first quarter from 38, 8% in 2023.

Aldo: This was largely due to increased volumes and the higher gross margin critical industry sector lower material cost and other cost savings from RCI initiatives.

Aldo J. Pagliari: Net earnings of $263.5 million, or $4.91 per diluted share, including an $8.8 million, or $0.16 per diluted share, after-tax benefit from the legal payment, compared to $248.7 million, or $4.60 per diluted share, in the first quarter of 2023. Now, let's turn to our segment, Results for the Court, starting with the C&I group on slide 7. Sales of $359.9 million compared to $363.8 million last year, reflecting a 2.5% organic sales decline and a $1.4 million of unfavorable foreign currency translation, partially offset by $6.7 million of acquisition-related sales. The organic decrease is primarily due to a double-digit reduction in the power tools business and a high, single-digit decline in the segment's Asia-Pacific operations, mostly associated with lower inter-segment

Aldo: 50 basis points from the benefit of acquisitions.

Aldo: Operating expenses as a percentage of sales rose 190 basis points to 25, 4% in the quarter from 23, 5% in 2023, primarily due to the effects of lower sales volumes investments in personnel and other cost and a 70 basis point impact from acquisitions.

Aldo: Operating earnings for the C&I segment of $55 4 million compared to $55 $8 million last year. The operating margin of 15, 4% compared to 15, 3% in 2020, turning now to slide eight.

Aldo: Sales in the snap on tools group of $500 1 million compared to $537 million, a year ago, reflecting a 7% organic sales decline, partially offset by $600000 of favorable foreign currency translation.

Aldo: The organic decrease reflects a high single digit decline in our U S business, partially offset by a mid single digit gain in our international operations.

Aldo: Gross margin improved 90 basis points to 48, 2% in the quarter from 47, 3% last year.

Aldo J. Pagliari: These declines were partially offset by a mid-single-digit gain in sales to customers and critical industries. With respect to critical industries, military and defense-related sales were robust, as was activity in the aviation sector. Gross margin improved 200 basis points to 40.8% in the first quarter from 38.8% in 2023. This is largely due to increased volumes in the higher gross margin critical industry sectors. Lower material costs and other cost savings from RCI initiatives and 50 basis points from the benefit of actors

Aldo: This improvement primarily reflects decreased sales of lower gross margin products.

Aldo: Operating expenses as a percentage of sales rose 190 basis points to 24, 7% in the quarter from 22, 8% in 2023, largely due to the lower sales volume.

Aldo: Operating earnings for the snap on tools group of $117 3 million compared to $131 $7 million last year.

The operating margin of 23, 5% compared to 24, 5% in 2023.

Aldo J. Pagliari: Operating expenses as a percentage of sales rose 190 basis points to 25.4% in the quarter, from 23.5% in 2023, primarily due to the effects of lower sales volumes, investments in personnel and other costs, and a 70 basis point impact from acquisition.

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

Aldo: Sales of $463 8 million compared to 446, $446 6 million in 2023.

Aldo: Selecting a three 3% organic sales gain and $2 5 million of favorable foreign currency translation.

Aldo: The organic increase includes a high single digit increase in activity with OEM dealerships and a low single digit gain in sales of under car equipment.

Aldo J. Pagliari: Operating earnings for the C&I segment of $55.4 million compared to $55.8 million last year, and an operating margin of 15.4% compared to 15.3% in 2023. Turning now to slide eight. Sales in the Snap-On Tools group of $500.1 million compared to $537 million a year ago reflect a 7% organic sales decline, partially offset by $600,000 of favorable foreign currency translation. The organic decrease reflects a high single-digit decline in our U.S. business, partially offset by a mid-single-digit gain in our international operations.

Aldo: Gross margin improved 150 basis points to 45% from 43, 5% last year, primarily due to benefits from lower material and other costs and savings from RCI initiatives operating expenses as a percentage of sales rose 60 basis points to 27% from 21% last year, primarily reflecting increased <unk>.

Aldo: Personnel and other costs.

Aldo: Operating earnings for the <unk> group of $112 9 million.

Aldo: Compared to $104 $6 million last year, the operating margin of 24, 3% compared to 23, 4% reported last year.

Speaker Change: Now turning to slide 10.

Speaker Change: Revenue from financial services increased $7 million or seven 6% to $99 6 million from $92 $6 million last year, primarily reflecting growth of the loan portfolio.

Aldo J. Pagliari: Gross margin improved 90 basis points to 48.2% in the quarter from 47.3% last year. This improvement primarily reflects decreased sales of lower gross margin products. Operating expenses as a percentage of sales rose 190 basis points to 24.7% in the quarter from 22.8% in 2023, largely due to lower sales volume.

Speaker Change: Financial services operating earnings of $68 3 million compared to $66 $3 million in 2023.

Speaker Change: Financial services expenses were up $5 million from 2023 levels, including $4 3 million of higher provisions for credit losses.

Aldo J. Pagliari: Operating earnings for the Snap-On Tools Group of $117.3 million compared to $131.7 million last year. The operating margin of 23.5% compared to 24.5% in 2023. Turn to the RS&I group, shown on slide 9.

Speaker Change: In the first quarters of both 2024 and 2023 the average yield on finance receivables was 17, 7% in the first quarters of 2024 and 2023, the average yield on contract receivables were 9% and eight 7% respectively.

Speaker Change: Total loan originations of $301 7 million in the first quarter represented an increase of $800000 or <unk> three tenths of 1% from 2023 levels increased originations of contract receivables were mostly offset by a low single digit decline in extended credit originations.

Aldo J. Pagliari: Sales of $463.8 million compared to $446.6 million in 2023, reflecting a 3.3% organic sales gain and $2.5 million of favorable foreign currency translation. The organic increase includes a high single-digit increase in activity with OEM dealerships and a low single-digit gain in sales of undercar equipment. Gross Margin improved 150 basis points to 45% from 43.5% last year, primarily due to benefits from lower material and other costs and savings from RCI initials. Operating expenses as a percentage of sales rose 60 basis points to 20.7% from 20.1% last year, primarily reflecting increased personnel and other costs.

Speaker Change: Moving to slide 11.

Speaker Change: Our quarter end balance sheet includes approximately $2 5 billion of gross financing receivables with $2 2 billion from our U S operation for extended credit or finance receivables. The U S 60 day, plus delinquency rate of one 8% is up 30 basis points from the first quarter of 2023, but unchanged from the rate reported last quarter.

Speaker Change: Trailing 12 month net losses for the overall extended credit portfolio of $54 1 million.

Representing 275% of Outstandings at quarter end.

Speaker Change: Is up 16 basis points from the end of last quarter.

Aldo J. Pagliari: Operating earnings for the RS&I Group were $112.9 million compared to $104.6 million last year. The operating margin was 24.3% compared to 23.4% reported last year. Now, turning to slide 10. Revenue from financial services increased $7 million, or 7.6%, to $99.6 million from $92.6 million last year, primarily reflecting growth in the loan portfolio. Financial Services operating earnings of $68.3 million compared to $66.3 million in 2023. Financial services expenses were up $5 million from 2023 levels, including $4.3 million of higher provisions for credit losses.

Speaker Change: Considering the current environment and despite the slight upward trends, we believe the delinquency and portfolio performance metrics remained relatively stable now.

Speaker Change: Now turning to slide 12.

Speaker Change: Cash provided by operating activities of $348 $7 million in the quarter represented 129% of net earnings and compared to $301 $6 million last year.

Speaker Change: The improvement as compared to the first quarter of 2023, largely reflects lower year over year increases in working investment, which included a reduction in inventory during the quarter as well as higher net earnings.

Speaker Change: Net cash used by investing activities of $63 $2 million, primarily reflected net additions to finance receivables of $40 2 million and capital expenditures of $41 $8 million net.

Speaker Change: Net cash used by financing activities of $164 2 million included cash dividends of $98 2 million and the repurchase of 248000 shares of common stock for $72 million under our existing share repurchase programs as of quarter end, we had remaining availability to repurchase up to an additional two one.

Aldo J. Pagliari: In the first quarters of both 2024 and 2023, the average yield on finance receivables was 17.7%. In the first quarters of 2024 and 2023, the average yields on contract receivables were 9% and 8.7%, respectively. Total loan originations of $301.7 million in the first quarter represented an increase of $800,000 or 0.3 tenths of 1% from 2023 levels. However, increased originations of contract receivables were mostly offset by a low single-digit decline in extended credit.

Speaker Change: Third $90 6 million of common stock under our existing authorizations.

Speaker Change: Turning to slide 13 trade and other accounts receivable increased $36 $2 million from 2023 year end days sales outstanding of 63 days compared to 60 days as of year end to 62 days as of the end of the first quarter of 2023.

Speaker Change: Inventories decreased $35 4 million from 2023 year end trade.

Trailing 12 month basis inventory turns of $2 four compared to two three at year end 2023 or.

Aldo J. Pagliari: Moving to slide 11, our quarter-end balance sheet includes approximately $2.5 billion of gross financing receivables, with $2.2 billion from our U.S. operation. For extended credit or finance receivables, the U.S. 60-day plus delinquency rate of 1.8% is up 30 basis points from the first quarter of 2023 but unchanged from the rate report of last quarter.

Speaker Change: Our quarter end cash position of $1 billion $121 million compared to 1 billion $1 5 million at year end 2023, our net debt to capital ratio of one 5% compared to three 8% at year end 2023 and.

Speaker Change: In addition to cash and expected cash flow from operations, we have more than $900 million available under our credit facilities as of quarter end. There were no amounts outstanding under the credit facility and there were no commercial paper borrowings outstanding.

Aldo J. Pagliari: Trailing 12-month net losses for the overall extended credit portfolio of $54.1 million, representing 2.75% of outstandings at quarter end, which is up 16 basis points from the end of last quarter. Considering the current environment, and despite these slight upward trends, we believe that delinquency and portfolio performance metrics remain relatively stable. Now turning to slide 12. Cash provided by operating activities of $348.7 million in the quarter represented 129% of net earnings and compared to $301.6 million last year.

Speaker Change: That concludes my remarks on our first quarter performance.

Speaker Change: I'll now briefly review a few outlook items for 2024 with respect to corporate expenses in the second quarter. We believe we could benefit from a legal payments similar to that received in the first quarter.

For the full year, we expect that capital expenditures will be in a range of $100 million to $110 million and we currently anticipate that our full year 2024 effective income tax rate will be in the range of 22% to 23%.

Speaker Change: I'll now turn the call back to Nick for his closing thoughts Nick.

Nicholas T. Pinchuk: Thanks Al.

Nicholas T. Pinchuk: Wow.

Nicholas T. Pinchuk: That's the first quarter.

Nicholas T. Pinchuk: Strength.

Nicholas T. Pinchuk: In the midst of collar.

Even with a part of the enterprise below standards.

Nicholas T. Pinchuk: You see snap on as a business that reaches very customers in different industries and in various geographies United in the coherence that is the criticality of work.

Aldo J. Pagliari: The improvement, as compared to the first quarter of 2023, largely reflects lower year-over-year increases in working investment, which included a reduction in inventory during the quarter, as well as higher net earnings. Net cash used by investing activities of $63.2 million primarily reflected net additions to finance receivables of $40.2 million and capital expenditures of $21.8 million. Net cash used by financing activities of $164.2 million, including cash dividends of $98.2 million and the repurchase of 248,000 shares of common stock for $70.2 million under our existing share repurchase program.

Nicholas T. Pinchuk: The essential nature of what we do and.

Nicholas T. Pinchuk: And we have the opportunity and advantage in virtual we have opportunity and advantage in virtually all of those arena and as a consequence, even when the largest of our entity entities is not standard we find a way in other areas to maintain overall strength is that coherent strategic breadth and the experience and capability of our <unk>.

Nicholas T. Pinchuk: To execute that is made snap on full resilient moving consistently upward for all these years and this quarter was another demonstration of that resilience.

Nicholas T. Pinchuk: C&I.

Nicholas T. Pinchuk: And engaging economic challenges across geographies extending to critical industries proving that snap on can roll out of the garage exploiting the considerable opportunity and do it profitably.

Aldo J. Pagliari: As of quarter end, we have remaining availability to repurchase up to an additional $290.6 million of common stock under our existing authorization, as shown in slide 13. Trade and other accounts receivable increased $36.2 million from 2023 year-end, day sales outstanding of 63 days compared to 60 days as of year-end and to 62 days as of the end of the first quarter of 2023. Inventory decreased $35.4 million from 2023 year-end. Trailing 12 month basis, inventory turns of 2.4 compared to 2.3 at year end 2023.

Nicholas T. Pinchuk: The tools group.

Nicholas T. Pinchuk: Acting to adapt pivoting to accommodate the techs uncertain outlook and their preference for quick payback products and doing it with still enviable margins.

Nicholas T. Pinchuk: In fact with gross margins up 90 basis points, showing the promise of their pivot.

Nicholas T. Pinchuk: Our C&I seeing opportunities where per shop owners and managers and making the most of it. Despite the challenges in Europe volume and margins growing in a very imperfect environment and the credit company working against the grain of short payback preferences and still raise and clouds.

Aldo J. Pagliari: Our quarter-end cash position of $1,121,000,000 compared to $1,001,500,000 at year-end 2023. Our net debt-to-capital ratio of 1.5% compared to 3.8% at year-end 2023. In addition to cash and expected cash flow from operations, we have more than $900 million available under our credit facilities. As of quarter end, there were no amounts outstanding under the credit facility, and there were no commercial paper borrowings outstanding.

Nicholas T. Pinchuk: It all came together to.

Nicholas T. Pinchuk: To keep activity flat despite the difficulty.

Nicholas T. Pinchuk: To register and Opco operating margin of 22, 9% up 90 basis points.

Nicholas T. Pinchuk: And to record an EPS of $4 91.

Nicholas T. Pinchuk: Numbers that are among our strongest ever results.

Nicholas T. Pinchuk: With or without the legal benefit.

Nicholas T. Pinchuk: And as such.

We look ahead with confidence fortified by our inherent advantages in our product deep wide and growing solving more critical path everyday.

Nicholas T. Pinchuk: Advantages in our brand snap on is the outward sign of pride working men and women taken the jobs.

Nicholas T. Pinchuk: And advantage and our people are committed.

Aldo J. Pagliari: That concludes my remarks on our first quarter performance. I'll now briefly review a few Outlook items for 2024. With respect to corporate expenses, in the second quarter, we believe we could benefit from a legal payment similar to that received in the first quarter. For the full year, we expect capital expenditures to be in a range of $100 to $110 million, and we currently anticipate that our full year 2024 effective income tax rate will be in the range of 22 to 23 percent.

Nicholas T. Pinchuk: Capable turbulence tested many times a team that knows how to ring the positive out of the difficult and fueled by those advantages. We believe snap on we will maintain its strength moving positively throughout 2024 and well beyond.

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

Speaker Change: No.

Speaker Change: The first quarter was a resilient and robust demonstration of snap on strengths against challenge.

Speaker Change: And it all reflects your extraordinary effort to make it so.

Nicholas T. Pinchuk: I'm now turning the call back to Nick for his closing thoughts. Thanks, Aldo. Wow. That's the first quarter. Strength in the midst of cholera.

Speaker Change: For your contributions to results.

Speaker Change: Yeah.

Speaker Change: You have my congratulations for the special capabilities, you bring to bear on behalf of our team everyday you have my admiration.

Nicholas T. Pinchuk: Even with a part of the enterprise below standard. You see, Snap-On is a business that reaches varied customers in different industries and in various geographies, united in a coherence that is the criticality of work, the essential nature of what we do. And we have the opportunity and advantage in virtually all of those areas.

Speaker Change: And for the unshakable belief you consistently displaying our future.

Speaker Change: You have Mike Thanks.

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

Speaker Change: We will now begin the question and answer session.

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

Nicholas T. Pinchuk: And as a consequence, even when the largest of our entities is not at standard, we find a way in other areas to maintain overall strength. It's that coherent strategic breadth and the experience and capability of our team to execute that has made Snap-On so resilient, moving consistently upward for all these years. And this quarter was another demonstration of that resilience. CNN, engaging economic challenges across geographies, extending to critical industries, proving that Snap-On can roll out of the garage, exploiting the considerable opportunities, and do it profitably, acting to a death, to accommodate the tech's uncertain outlook and their preference for quick payback products and doing it with still enviable margins. In fact, with gross margins up 90 basis points, showing the promise of their pivot. Arsenae, seeing opportunities with pear shop owners and managers and making the most of them despite the challenges in Europe.

Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Speaker Change: Our first question today comes from Scott <unk> with Roth MTM. Please go ahead.

Scott: Good morning, and thanks for taking my questions good.

Scott: Morning, Scott.

Scott: Nick It sounds like within tools. The power tools was the weakest could you maybe quantify that how much and maybe just talk about how the other subs sub segments like tool storage diagnostics and handles that.

Parcels was down the most interesting thing powered tools.

Scott: I hate to say tough comparison, they did have a difficult comparison year over year last year was one of the bigger court. It actually was up sequentially. So we saw some movement there in the pivot towards shorter payback items versus where we were in the fourth quarter. I think that was certainly down the biggest and as I think <unk> said it was down double digits.

Nicholas T. Pinchuk: Volume and margins were growing in a very imperfect environment. And the credit company, working against the grain of short payback preferences and still raising profits, it all came together. Keep activity flat despite the difficulties, to register an opco operating margin of 22.9%, up 90 basis points, and to record an EPS of $4.91, numbers that are among our strongest ever results, with or without the legal benefit. And that's that. We look ahead with confidence, fortified by our inherent advantages in our product: deep, wide, and growing. Solving more critical tasks every day, advantages in our brand. Snap-On is the outward side of pride, working men and women taking the job, and an advantage in our Unknown Attendee Committed, capable.

Scott: Diagnostics was down but the one of the things that did help the.

Scott: The profitability was the fact that tool storage was up and hand tools wasn't as afflicted as the others and so therefore, what the tools group actually makes you'll remember that in our in the in the.

Scott: Array of products the tools group for tool storage and.

Scott: <unk> handles gets a full demand in both our distribution and manufacturing margin.

Scott: That really is what describes the product.

Scott: It was kind of when we look at it we can see the effects of pivoting tool storage was up but it was in.

Nicholas T. Pinchuk: Turbulence tested many times, a team that knows how to wring the positive out of the difficult. And fueled by those advantages, we believe Snap-On will maintain its strength, moving positively throughout 2024 and well beyond. Now, before I turn the call over to the operator, I'll speak directly to our franchisees and associates worldwide. You know, the first quarter was a resilient and robust demonstration of Snap-On's strength against competition. It all reflects your extraordinary effort to make it so, and for your contributions to the result.

Scott: What we call the lower end, we're kind of pleased with it because we worked hard on the algo when a plant kind of do this pivot to get more capacity in the in the accessory.

Scott: And in the classic line in our cards and the accessories and a classic had big quarters and those are the lower cost items, which people don't get is embroiled in longer payback. So we're.

Scott: We're kind of pleased with that and hand tools.

Scott: Some of the raise out of customer connection that we rolled out and we're rolling out more going forward.

Scott: Yeah.

Scott: So some of the two new power tools that you referred to you said help us on the way when.

Nicholas T. Pinchuk: You have my congratulations, for the special abilities you bring to bear on behalf of our team every day. You have my admiration, and for the unshakable belief you consistently display in our future. You have my thanks.

Scott: When do you think we'll start seeing is this starting to ship to them.

Scott: Sure.

Nicholas T. Pinchuk: Now I'll turn the call over to the operator. Operator. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

Scott: Now some of that in the quarter towards the end of the quarter.

Scott: <unk> laid out things got better I think sales off Atlanta to demand.

Scott: Better as the quarter went on so we kind of had some momentum I hate the overplay that because I've seen I've been here, a while I see all kinds of cannibalization from quarter to quarter.

Scott: And it did have Easter this year, it's still a look pretty good. So I think we're kind of encouraged by that what I mean.

Operator: To withdraw your question, please press star then 2. Our first question today comes from Scott Stember with Roth MKM. Please go ahead. Good morning, and thanks for taking my question. All right, Scott. Nick, it sounds like within the tools that Power Tools was the weakest. Could you maybe quantify that, how much, and maybe just talk about how the other sub-segments like tool storage, diagnostics, and hand tools did? Power Tools was down the most. Interesting thing, Power Tools, you know, I hate to say tough comparison, but they did have a difficult comparison year over year. Last year it was one of the bigger courts.

Scott: By that what I like those two that I brought out we brought out of other ones and we have an array of new ones coming out in the second quarter around power tools. So I think what I meant there is help us on the way as we had we introduced in the quarter, though a couple of things plus others have those two I mentioned plus we've got others comment.

Speaker Change: Got it and just last question if you were to take out the intercompany pressure.

Speaker Change: Chris and I and C&I.

Speaker Change: Sternal sales how did they do in both of those segments in the quarter.

Speaker Change: Well.

Speaker Change: Yeah look if you look at it organically without currency on acquisitions, which would raise the numbers actually were just apples to apples is C&I was up two 2% externally and I think our C&I was up almost 658% so our tonight.

Scott Lewis Stember: It actually was up sequentially, so we saw some movement there in the pivot toward shorter payback items versus where we were in the fourth quarter. I think that was certainly down the biggest, and as I think Aldo said, it was down double digits. Diagnostics was down, but one of the things that did help the profitability was the fact that tool storage was up, and hand tools weren't as afflicted as the others.

Speaker Change: Pretty good right in our right, where we expected them to be all the time to us and I really had pretty good quarter and actually given Europe seven seven countries in recession.

Speaker Change: And so you see this kind of thing.

Speaker Change: I think the handfuls business in Europe was kind of indefinitely and so the other businesses went pretty well so we're pretty pleased with those businesses.

Scott Lewis Stember: And so therefore, what the tools group actually makes, you know, remember that in the array of products, the tool group for tool storage and hand tools gets both a distribution and manufacturer's margin. So that really is what describes the product array, what we call the lower end. We're kind of pleased with this because we worked hard at the Algona plant trying to do this pivot to get more capacity in the accessory line and in the classic line in the carts. And the accessories in the classic line had big quarters.

Speaker Change: Got it that's all I have for now thank you.

Speaker Change: The next question is from Christopher Glynn with Oppenheimer. Please go ahead.

Christopher D. Glynn: Thanks, Good morning, guys and ladies.

Christopher D. Glynn: Nick.

Christopher D. Glynn: These descriptions on the NPI. So it was actually laughing a bit because had issue with.

I think the caliper pins on my Sequoia last time, they fixed the break so.

Nicholas T. Pinchuk: And those are the lower cost items that people don't get as embroiled in and have a longer payback. So we're kind of pleased with that. And hand tools, I showed you some of the arrays out of Customer Connection that we rolled out, and we're rolling out more going forward. So some of the two new power tools that you referred to, you said help is on the way. When do you think we'll start seeing this? Is this starting to ship to the US or Canada?

Christopher D. Glynn: Boy It was on your list, but you can add it with lots of things itself. When we talk about short payback items. These guys can see the tool I say, hey, I have been spending.

Christopher D. Glynn: Our dog's age six of these things and it does help so I think it works out will taper off.

Christopher D. Glynn: Yes.

Speaker Change: Hey, I was wondering if you could contrast share some thoughts on the kind of deal.

Nicholas T. Pinchuk: We saw some of that in the quarter toward the end of the quarter. You know, the way the quarter played out, things got better, I think. Sales off the man, sales through the man, got better as the quarter went on. So we kind of had some momentum. I hate to overplay that, because I've seen all kinds of calibrations from quarter to quarter. You know, the end did have Easter this year, and still it looked pretty good.

Speaker Change: Strange from repair shops within auto repair umbrella versus the.

Technicians.

Speaker Change: Having some confidence.

Speaker Change: Look we.

Speaker Change: We've seen it before.

Speaker Change: We actually saw in.

Speaker Change: The financial recession, the great financial recession back.

Speaker Change: More than 10 years ago, and and the Coke is.

Speaker Change: As the Covid the shafts werent down that much it was down for a few weeks and then they figured out what to do and they were they were Harman bolt in both situations, but the technicians or confidence poor they.

Nicholas T. Pinchuk: So I think we were kind of encouraged by that. What I meant by that was, I like those two that I brought out. We brought out other ones, and we have an array of new ones coming out in the second quarter around power tools. So I think what I meant there is help is on the way as we had introduced in the quarter a couple of things plus others, those two I mentioned, plus we've got others coming. I got it.

They didn't know where the world was going so if you remember I think it is.

Speaker Change: In the beginning of the coal, but we had the recoveries coming out we have that V shaped recovery in the third and fourth quarter that was driven a lot by handfuls small payback empower small payback items short payback items and so that's what they do they kind of say I don't want.

Speaker Change: No.

Speaker Change: It's very interesting financial economy, we have all these calculations.

Nicholas T. Pinchuk: And just last question, if you were to take out the intercompany pressure in RS&I and CNI, what were external sales? How did they do in both of those segments in the quarter? Well, oh, yeah, look, if you look at it organically, without currency in on acquisition, which would raise the numbers, actually, with just, you know, apples to apples, CNI was up 2.2% externally, and I think ours and I were up almost 6, 5.8%.

Speaker Change: The people of work.

Speaker Change: They get up every morning, and they see the news for breakfast and if it's not enough of it is bad they start to lose confidence and so that's what they're saying, they're saying, they're thinking geez I don't know where these wars in Congo.

Speaker Change: We're going to start raising taxes are kids going to have to fight the border or seems to be a migration all of those things and they start saying well I'm not sure I know what I'm doing good now, but I'm not sure what's going to happen in the future. They don't think in terms of soft landing heartland I'm not sure what's going to happen in the future. So they don't want to get them ourselves out in traffic.

Speaker Change: Times, the narrative about everyday working people isn't that theyre propagated and borrow in bad times.

Nicholas T. Pinchuk: So ours and I were, you know, pretty good, right in our right place where we expect them to be all the time. So we really had a pretty good quarter. And actually, given Europe, seven, seven countries in recession, you know, and so you see this kind of thing, I think the Hansel's business in Europe was kind of in disrepute.

Speaker Change: It's not been my experience.

These people are pretty okay.

Speaker Change: Okay.

Speaker Change: And sticking with those checks.

Speaker Change: So we're seeing the lagged effect of inflation and rates a bit here.

Nicholas T. Pinchuk: And the other businesses went pretty well, so we're pretty pleased with those. That's all I have for now.

Speaker Change: Small private operators.

Speaker Change: And Youre focused on pivoting the focus to match the faster payback.

Operator: Thank you. The next question is from Christopher Glynn with Oppenheimer. Please go ahead.

Speaker Change: Should we.

Christopher D. Glynn: Good morning, guys and ladies. Nick, the nice descriptions on the NPIs. I was actually laughing a bit because I had that issue with the, I think, the caliper pins on my Sequoia last time I fixed the brakes. So I don't think Sequoia was on your list, but you can add it.

Speaker Change: Basically yes.

Speaker Change: Figure.

Speaker Change: A couple of quarters two to align that as you.

Speaker Change: January the organizational.

Speaker Change: I don't know certainly on tasking the tools group to do it at light speed.

Nicholas T. Pinchuk: And that's because of the kinds of things that sell. When we talk about short payback items, these guys can see the tool and say, hey, I haven't spent a dog's life fixing these things, and this helps. So I think it works out okay for us, yeah. Hey, I was wondering if you could compare and contrast the kind of decent strength from repair shops with an auto repair umbrella versus the technicians. Unknown AttendeeHaving some confidence.

Speaker Change: But and we are working on with alacrity. It isn't it isn't unknowable amount because what happens is as you move your capacity around and the fact is as you refocus your capacity no matter how much you start putting that things you start you start you start setting yourself back you set up more cash to deliver.

Speaker Change: And sometimes that can be a problem.

Speaker Change: Despite the number the number was worse.

Speaker Change: I think a little bit in the quarter, but we saw progress there and we saw the characteristics shifting and so we think that's going to work for us because we've seen it work before I don't know how long that will take.

Nicholas T. Pinchuk: Look, I, we've seen it before, you know, we actually saw it. The financial recession, the great financial recession back, what, more than 10 years ago, and the cold of the shots wasn't that much down. They were down for a few weeks, and then they figured out what to do. And they were humming in both situations. But the technicians were confidence poor. They didn't know where the world was going.

Speaker Change: Now certainly we expected to see improvement.

Speaker Change: As we go forward, what the rates of that improvement or I cannot tell.

Speaker Change: Makes sense. Thank you Nick.

Speaker Change: The next question is from David Macgregor with Longbow Research. Please go ahead.

Nicholas T. Pinchuk: So if you remember, I think it was approximately in the beginning of COVID when we had the recoveries coming out and, uh, when we had that V-shaped recovery in the third and fourth quarter, that was driven a lot by hand. Small Payback Items, Short Payback Items. And so that's what they do; they kind of say, I don't know, it's very interesting. Financial economics, we have all these calculations.

David Sutherland MacGregor: Yes, good morning, everyone.

David Sutherland MacGregor: Good morning, guys.

David Sutherland MacGregor: I guess based on our work we expected weak accomplish some technicians. We also know you were more promotional than normal first quarter with the regional Kickoffs and follow on clearly franchisees were not responding to those.

David Sutherland MacGregor: Promotional levels to the extent, we thought I guess going forward do you reach further the promotional discounts and incentives can.

David Sutherland MacGregor: Can you restore growth in the tools segment in 2024 are we looking at segment continuing in a negative mid single digit pace through the balance of the year. It sounded like your answer to the last question was kind of a more passive approach where you just have to wait and see how things play out as opposed to maybe taking more active initiatives.

Nicholas T. Pinchuk: The people at work think, they get up every morning, and they see the news for breakfast, and if enough of it is bad, they start to lose confidence. And so that's what they're saying, they're saying, they're thinking, geez, I don't know, where are these wars going? You know, they're going to start raising taxes, are kids going to have to fight, you know, the border seems to be a migration route, all those things, and they start saying, well, I'm not, I know I'm doing well now, but I'm not sure where or what's going to happen in the future. They don't think in terms of soft landing, hard landing. I'm not sure what's going to happen in the future, so they don't want to get themselves out in traffic.

Speaker Change: I don't.

Speaker Change: Yes.

Speaker Change: I don't know if I accept your first premise.

Speaker Change: We were more programmatic and our promotions in the first quarter than usual.

Speaker Change: I don't know that to be true, David though I'm not reviewing every promotions all the time.

Speaker Change: So I couldnt sit here a review of the mall.

Speaker Change: So I don't think our view is like this.

Speaker Change: The real solutions that is is the pivot.

Speaker Change: And the more the more of these small products. These short payback products and theyre profitable that we get out the more sales will have.

Speaker Change: I think trying to promote against the winners like corn water up a rope.

Nicholas T. Pinchuk: Sometimes the narrative about everyday working people is that they're profligating, borrowing in bad times. That's not been my experience. These people are pretty great.

Speaker Change: And so we're not going to do that.

Speaker Change: We're not going to do that I'm not that desperate you know what.

Speaker Change: I mean look this is a quarter, okay the quarter as sub standard, but we expect improvement and Oh by the way I think our margins are still available.

Nicholas T. Pinchuk: Sticking with those texts, you know, maybe we're seeing the lagged effect of inflation and rates a bit here on, you know, small private operators, and you're focused on pivoting the focus to match the faster payback. Should we basically figure that you need a couple quarters to align that as you, you know, rejigger the organizational structure? It is an unknowable amount because what happens is, as you move your capacity around in the factories, as you refocus your capacity, no matter how much you start putting that thing in, [inaudible] You know, certainly we expect to see improvement as we go forward. But what the rates of that improvement are, I cannot tell under make sense. Thank you. The next question is from David MacGregor with Longbow Research. Please go ahead.

Speaker Change: So I'm not going to we're not going to go but I'm.

Speaker Change: I'm not saying, we won't have good promotions, that's not what I'm, saying, what I'm, saying, we're not going to get our hair on fire audits in a promotion line.

Speaker Change: We will get our hair on fire and trying to pivot designing short payback items altering the capacity in the factory and having our people and sales work more on put more energy and to getting our franchisees. How are you going to sell the shorter payback items.

Speaker Change: Sure if somebody wants to buy an epic will be so we'll be happy to accommodate them, but that's what I'm talking about here I don't think I don't think we're gonna be promote anymore than normal any different than normal, let's put it that way except maybe.

Speaker Change: Promotions on maybe some short payback items to try to give people some energy around promotions aren't actually David promotions arent necessarily cost reductions, although they appear to be sometimes you know a price reduction sometimes are just about creating energy and focus.

Speaker Change: No I haven't.

David Sutherland MacGregor: Yeah, good morning, everyone. Good morning, Nick. I guess, you know, based on our work, we expected the weaker confidence from technicians, but we also know you were more promotional than normal in the first quarter with the regional kickoffs and follow-ons, and clearly, franchisees were not responding to those elevated promotional levels to the extent we thought. I guess going forward, do you plan to raise promotional discounts and incentives further? Can you restore growth in the tools segment in 2024, or are we looking at the segment continuing at a negative mid-single-digit pace through the balance of the year?

Speaker Change: I'm pretty certain that your post our original kick off promotions were up year over year versus last year, but I can follow up with you offline on that I'm not saying.

Speaker Change: I'm, not saying you're wrong, David I'm, just saying I'm not aware I don't I don't feel like we were frenetic about it that's all I don't okay.

Speaker Change: Guy if you want I can think of them.

Speaker Change: Following every promotion I don't.

Speaker Change: But the envelope I kind of describe to you we expect to follow.

Speaker Change: Yes.

Speaker Change: Couple of follow up questions can you talk about the progress you made this quarter with incremental manufacturing capacity and maybe the extent to which that increase the ability to ship provided a partial offset to the negative top line.

David Sutherland MacGregor: It sounded like your answer to the last question was kind of a more passive approach where you just have to wait and see how things play out as opposed to maybe taking more active initiatives. Unknown Attendee You know.

Speaker Change: Wow.

Speaker Change: I don't know about the volumes, but we certainly got out what I liked what happened in our bone or David.

Nicholas T. Pinchuk: I don't know if I accept your first premise, that we were more frenetic in our promotions in the first quarter. I don't know that to be true. You know, David, though, I'm not reviewing every promotion all the time either, you know, so I couldn't sit here and review them all. I don't think so, though. I don't think our view is like...

Speaker Change: The physical storage plant it seemed as though out which had been pounding away on it for a long time as I know youre very well aware you know had made pretty good progress I think we're a little behind that in say like Elizabeth and helped by an end mill certainly Milwaukee in terms of a handful of plants may be a little more difficult.

Speaker Change: To create the changes and create the pivot. So I was pleased in what happened in I don't know I don't know, though yeah.

Nicholas T. Pinchuk: The real solution to this is to pivot. And the more, the more of these small products, you know, these short payback products, and they're profitable, that we get out, the more sales we'll have. I think trying to promote against the win is like pouring water up a rope.

Speaker Change: Not so much liquidation I don't think there was that much of that I think.

Speaker Change: That would've been helped in the fourth quarter some too.

Speaker Change: So I don't I don't know I'm, not really a big factor in this situation.

Nicholas T. Pinchuk: You know, and so we're not going to do that. We're not going to do that. I'm not that desperate.

Speaker Change: Okay.

Speaker Change: This last quarter, you had some inventory put back from franchisee attrition that contributed to the negative growth.

Nicholas T. Pinchuk: You know what I mean? Look, this is a quarter, okay, the quarter is substandard, but we expect improvement. And, oh, by the way, I think our margins are still enviable. So I'm not going to, you know, we're not going to go, I'm not saying we won't have good promotions. That's not what I'm saying.

Speaker Change: Franchisee attrition up again this quarter and it was the inventory put back again the source of negative growth.

Speaker Change: Uh huh.

Speaker Change: I would say there was any.

Speaker Change: Inventory put back, but maybe you know maybe a little bit less and that's about the same I suppose as the fourth quarter, maybe not quite the same maybe not quite the same. So we didn't see quite the biggest you know what happened and I think the the phenomena there Dave is David is that.

Nicholas T. Pinchuk: But I'm saying we're not going to get our hair on fire on this in a promotion. We will get our hair on fire in trying to pivot, designing short payback items, altering the capacity in the factory, and having our people in sales work more on, and put more energy into getting our franchisees. How are you going to sell these shorter payback items? Sure, if somebody wants to buy an Epic, we'll be happy to accommodate them, but that's not what I'm talking about here.

Speaker Change: Remember I said that everybody was like they were white hot coming out of the SFC and then all of a sudden everybody is starting to get a little nervous.

Speaker Change: And that causes a little more put back I don't think we had that transition piece in this period.

And also that probably ended up not having as much pushback.

Speaker Change: Okay and the last question for me just on credit I guess I'm trying to make sense of the flat originations given the.

Nicholas T. Pinchuk: I don't think we're going to be promoting any more than normal, or any different than normal. Let's put it that way, except maybe to focus promotions on maybe some short payback items to try to give people some energy around it. Promotions aren't... Actually, David, promotions aren't necessarily... Cost reductions, although they appear to be sometimes, you know, price reduction, sometimes it's just about creating energy and focus. Unknown Attendee Like having a pep talk. Unknown Attendee, I'm pretty certain that your post-regional kickoff promotions were up year-over-year versus last year, but I can follow up with you offline on that. I'm not saying you're wrong, David.

Speaker Change: Sounds like the diagnostics business in particular, it might be pretty weak.

Speaker Change: How much of that do you think was kind of a revolving account transfers in.

Speaker Change: Turning to these.

Speaker Change: I don't think that much watched that that that I'm pretty sure I know Pat that number that didnt change was actually lower okay. Yeah, yeah, not really I'm back okay.

Speaker Change: But what's changing in terms of the EC approval rates and I guess, you mentioned do you see your originations were down low single digits I'm, just guessing overall credit penetration rates you Directionally lower can you just talk a little bit about what youre seeing in credit trends.

David Sutherland MacGregor: I'm just saying, I'm not aware, you know; I don't feel like we were frenetic about it. That's all. I don't, you can talk to the wrong guy if you want, you know, if you think I'm following every promotion, I don't.

Speaker Change: Okay.

Speaker Change: Provisioning was up for failure.

Speaker Change: Sure.

Speaker Change: I don't think the penetration rates are different at all I think is what Nic has described as lower sales of big ticket items and if there's lower big ticket items than there is low and you see a lower EC originations, but I don't think there's anything dramatic in terms of a shift of any sort.

Nicholas T. Pinchuk: But the envelope I kind of described to you, we expect to follow. Yeah, just a couple of follow-up questions. Can you talk about the progress you made this quarter with incremental manufacturing capacity and maybe the extent to which that increased ability to ship provided a partial offset to the negative top line? I don't know about the volumes, but we certainly got out what we liked. I like what happened in Algona.

Speaker Change: In terms of hall of snap on credit as well.

Speaker Change: Participating in the sale.

Speaker Change: It helps David you know remember those.

Speaker Change: The small faster payback items, so in diagnostics diagnostics was down but the.

Speaker Change: Smaller and soulless plus was strong in the quarter and that doesn't get EC as much as say the top end of Zeus. So some of that in that situation, but.

Nicholas T. Pinchuk: You know, the storage plant. It seemed as though Algona, which had been pounding away on it for a long time, as I know you're very well aware, had made pretty good progress. I think we're a little behind that in, say, Elizabethan and Elfmont and certainly Milwaukee in terms of the hand tool plants, maybe a little more difficult to create the changes and create the pivot. So I was pleased with what happened, and I don't know, I don't know, though, eh, not so much liquidation. I don't think there was that much of that. That would have been helped in the fourth quarter some too, you know, so I don't know.

Speaker Change: Not really much change.

Speaker Change: Well as I do that EC doesn't necessarily followed directly to the great.

Speaker Change: Activity Okay great.

Speaker Change: Good thanks, very much gentlemen.

Speaker Change: The next question is from Gary <unk> with Barrington Research. Please go ahead.

Gary: Good morning, all.

Gary: Good morning, Gary can you maybe could you maybe just help me out here I mean, you know.

Gary: The market for repair order repairs is very strong.

Gary: No.

Gary: Sometimes takes longer than you would expect to get your car repaired even on the collision side.

Gary: But didn't you say youre, saying your power tools is down.

Nicholas T. Pinchuk: I'm not really a big factor in it. Okay. This last quarter, you had some inventory put back from franchisee attrition that contributed to the negative growth. Was franchisee attrition up again this quarter? Was the inventory put back again a source of negative growth? [inaudible] I would say there was, you know, inventory put back, but maybe, you know. Maybe a little bit less than the, you know, about the same, I suppose, as the fourth quarter. Maybe not quite the same, maybe not quite.

Gary: And.

Gary: Diagnostics down.

Gary: The technicians really need to have these products in order to do their jobs correctly and efficiently and quickly. So I guess, what I'm asking is is this just really a function of maybe whats going on tools group is that youre diagnostic products have kind of permeated.

Gary: The channel and there's not a lack of lack of demand is maybe being driven by the fact that everybody's needs have been.

Nicholas T. Pinchuk: So we didn't see quite the biggest, you know, what happened. And I think the phenomenon there, David, is that, you know, remember, I said that everybody was like they were white hot coming out of the SFC. And then all of a sudden, everybody's starting to get a little nervous, and that causes a little more putback. I don't think we had that transition piece during this period. You know, so that probably ended up not having as much put back.

Gary: Taken care of and then on the other side the power tools, maybe there is just.

Gary: Just hasn't been.

Gary: The opportunity to innovate as much as you had maybe last year to drive growth I'm just trying to square all this together and look I think I think the thing as you could.

Nicholas T. Pinchuk: Okay, and the last question for me, just on credit, I guess I'm trying to make sense of the flat originations given that it sounds like the diagnostics business in particular might be pretty weak. How much of that do you think was kind of revolving account transfers? And what's changing in terms of these? I don't I don't think I don't watch that, that I'm pretty sure I know that number that didn't change. It's actually lower.

Gary: In diagnostics, we did sell quicker.

Gary: Quicker payback items.

Gary: Solar plus.

Gary: It is the big ticket ones like Zeus, which is quite a bit more expensive that business out.

Gary: In power tools, yes, it can be it can it can follow very strongly what is introduced in a certain period of time the power tools I think looks worse than it is like I said it was up sequentially.

David Sutherland MacGregor: Okay. Yeah. Not really.

Aldo J. Pagliari: Yeah. Okay. [inaudible] I don't think the penetration rates are different at all.

Gary: With some some reasonable gain so I think we see progress in the power tools.

Nicholas T. Pinchuk: I think it's what Nick has described as lower sales of big-ticket items. And if there are lower big-ticket items, then there are lower EC originations. But I don't think there's anything dramatic in terms of a shift of any sort in terms of how the Snap-On credit is participating in the sales of the tools group. If it helps, David, you know, remember there are, you know, the small, faster payback items. So in diagnostics, diagnostics was down, but the smaller end, Solace Plus, was strong in the quarter. And that doesn't get EC'd as much as, say, the top end, the Zeus.

I do think I don't think we're seeing that we've seen it before where we're technicians will focus on things. They have they have an array of things they want to buy from snapper.

Gary: And often when they are confronted with this they make a transition to say well, where how can I, how can I I want to see the world play out a little bit more out by this wrench or all by the smaller box are all by a small diagnostic or maybe hold onto my power to a little bit longer people need the products.

Gary: But on the other hand, it is an imprecise thing, sometimes they'll say, okay, I need to I need a particular power tool or a diagnostics because I had trouble last week on this particular on some Toyota or maybe on a BMW.

Nicholas T. Pinchuk: So some of that's in that situation, you know. Not really much change. You know as well as I do that EC doesn't necessarily follow directly.

Nicholas T. Pinchuk: Right. Activity. Okay.

Gary: And they'll say well I'll wait a little while because I won't see another BMW for a month or two.

Nicholas T. Pinchuk: Right. Good. Thanks very much, gentlemen. The next question is from Gary Prestopino with Barrington Research. Please go ahead. Hi, good morning all. Can you maybe could you maybe just help me out here?

Gary: Our quarter, three or four months, you'll see that it's an imprecise situation simply our view of it is moral it's always influenced byproduct about the new stuff that rolls out its a complex array, but what's happening at least as far as we can report and I've talked a lot of guys.

Gary Frank Prestopino: I mean, you know, the market for repair auto repairs is very strong. Sometimes it takes longer than you would expect to get your car repaired even on a collision site. But you're saying your power tools are down, and diagnostics are down. Don't the technicians really need to have these products in order to do their jobs correctly and efficiently and quickly?

Gary: Is that the technicians, one guy one guy and.

Gary: In Northern California said.

Gary: The the techs are scared.

Speaker Change: Another guy I talked to in Kentucky couldn't in Kentucky said Theyre getting involved in the everyday news, it's weighing them down.

Speaker Change: I got another guy in Nevada, Reno, He said, they're they're they're obsessing over the election.

Speaker Change: So I'm telling you this.

Nicholas T. Pinchuk: So I guess what I'm asking is, is this really a function of maybe what's going on in the tools group is that, you know, your diagnostic products have kind of permeated the channel, and there's not a lack of demand is maybe being driven by the fact that everybody's needs have been taken care of. And then on the other side, the power tools, maybe there just hasn't been the opportunity to innovate as much as you had maybe last year to drive growth.

Speaker Change: It's kind of a you know it's sort of a sand, whereas the environment is going to go I'm going to keep my powder dry for a while I'm going to.

Speaker Change: Take it bit by bit I don't want to take a big bite.

Speaker Change: Okay.

Speaker Change: I want to figure out when they want to figure out how to repair cars. They don't take a big bite.

Speaker Change: Alright, and then I guess less.

Speaker Change: You had mentioned that this had happened before I think in the great recession.

Speaker Change: And I had stated in our calls.

Speaker Change: Gary and then Colby.

Nicholas T. Pinchuk: I'm just trying to square all this together. And look, I think I think the thing is you could do in diagnostics. We did sell the quicker payback ones, The Solus Plus. It was the big ticket ones like Zeus, which is quite a bit more expensive, that didn't sell.

Speaker Change: So how long did this take the flush out was this a couple of quarter phenomenon.

Speaker Change: You know.

Speaker Change: In the Covid.

Colby: I would say it took.

Three quarters, maybe two quarters.

Colby: For people to get used and basically that was driven more by the way.

Nicholas T. Pinchuk: In power tools, yes, it can follow very strongly what's introduced in a certain period of time. But the power tool, I think, looks worse than it is. Like I said, it was up sequentially, with some reasonable gain. So I think we see progress in the power tool. So I, I don't think we're seeing the same thing we've seen before, where technicians will focus on things they have; they have an array of things they want to buy from Snap-On. And often, when they're confronted with this, they make a transition to say, well, where, how can I, how can I, I want to see the world play out a little bit more.

Colby: Talking about attitude and it took about two quarters, maybe two and a half quarters for them to say.

The all clear is blowing.

Colby: Nothing is really going to happen, we're out of the colon and the great financial recession is a little longer.

Colby: But you know it all depends on I'll use they get to it now we helped this by pivoting remember that in this situation, we help it by giving them more small bites.

Colby: So some of this has to do with matching the product that the new product available that's analyzing them.

Colby: They're willing to take on.

Colby: And that's what we're doing.

Speaker Change: Thank you.

Right.

Speaker Change: The next question is from Luke Young with Baird. Please go ahead.

Luke Young: Hello, Good morning.

Luke Young: Good morning, Thanks for taking the questions maybe just pivoting on that last point there Nick just trying to get a feel for your guide of how much you think is under your control as you make this pivot like you said just matching new products with where the demand is right now in terms of I guess I'd be interested to get your perspective on.

Nicholas T. Pinchuk: I'll, I'll buy this wrench, or I'll buy this smaller box, or I'll buy a small diagnostic, or I'll, I'll maybe hold on to my power tool a little bit longer. People need the products. But on the other hand, it is an imprecise thing.

Nicholas T. Pinchuk: Sometimes they'll say, okay, I need a particular power tool, and they'll say, Well, I'll wait a little while because I won't see another BMW for a month, or an hour and a quarter, three or four months. You'll see that it's an imprecise situation. Simply, our view of it is that it's always influenced by the product, by the new stuff that rolls out. It's a complex equation.

Speaker Change: The last six months, just how much that feedback has changed as well.

Speaker Change: Mechanics want and to what extent are the franchisees able to kind of give you demand clues or is it more about kind of pushing the right products to the franchisees.

Nicholas T. Pinchuk: But what's happening, at least as far as we can report, and I've talked to a lot of guys, is that technicians? One guy, one guy in... (inaudible) The techs are scared. Another guy I talked to in Kentucky, Cristin in Kentucky, said they're getting involved in the everyday news, and it's weighing them down. I got another guy in Nevada, in Reno, who said they're assessing the election. So I'm telling you, this is, this is kind of a, you know, it's, it's sort of a saying, where's the environment going to go? I'm going to keep my powder dry for a while. I'm going to just take it bit by bit. I don't want to take a big bite.

Speaker Change: No no not at all.

Speaker Change: The man clues I mean fundamentally it's gone up on a on a macro basis look and say you know I don't know if it's six months just sort started sometime in October I don't how long it but but but the thing is is that it's pretty much.

Speaker Change: What people will say if I buy this now I can get a payback now and I don't get committed for longer terms. So.

Speaker Change: That's that's a description in general of course, everything I would say about the technician is probably doesn't apply to every every technician in every garage is probably a great landscape for this but thats simply what we're doing and so we're getting feedback from our franchisees on this and we're doing a lot of customer connection on that I'm talking to.

Nicholas T. Pinchuk: So when they want to figure out how to repair cars, they don't take a big bite. All right, and then I guess the last thing you mentioned that this had happened before, I think in the Great Recession, and I Gary and in COVID. So, how long did this take to flush out? Was this a couple of quarter phenomenon? Um, you know... Unknown Speaker In COVID, I would say it took 3 quarters, maybe 2 quarters.

Speaker Change: So as these all the time, we'll have the NFC inherent about four weeks I'll talk to them about it we're making a lot of clubs. So we're getting feedback from those guys and we have pretty good feedback right now we know where we're trying to go.

Speaker Change: And so that we believe that will work for us of course, it all all won't work, but once we execute on that then we will iterate to hone in now how long that takes and as I said before I think you know our view is our standard is to keep improving.

Nicholas T. Pinchuk: You know, for people to get used to the idea. Basically, that was driven more by the we're talking about attitudes. It took about two quarters, maybe two and a half quarters for them to say, the all clear is blowing. Nothing's really going to happen.

Speaker Change: I'm not so sure how quickly.

Speaker Change: I do think we have the capacity to do what we've done it before.

Speaker Change: And then maybe a question on <unk>, if I can sneak it in just the expanded opportunity right now seen with OEM dealerships, especially kind of new technologies.

Nicholas T. Pinchuk: We're out of COVID, and the great financial recession is a little longer. But, you know, it all depends on how used they get to it. Now, we help this by pivoting. Remember that in this situation, we help it by giving them more small bites.

Speaker Change: New things coming into the market just seems more of a secular opportunity I mean do you see the opportunity as any different versus this business historically either in kind of the scope of the opportunity here, even the margin opportunity may be.

Nicholas T. Pinchuk: So, some of this has to do with matching the product, the new product available that's tantalizing them with stuff they're willing to take on. And that's what we're doing. Thank you.

Luke L. Junk: The next question is from Luke Junk with Baird. Please go ahead. Just trying to get a feel for your gut of how much you think is under your control as you make this pivot, and like you said, just matching new products with where the demand is right now. I guess I'd be interested to get your perspective on the last six months, just how much feedback has changed about what mechanics want, and to what extent are the franchisees able to give you demand clues, or is it more about pushing the No, no, no.

Speaker Change: Look I think I think three things about our F&I.

Speaker Change: One is is that.

You've got.

Speaker Change: You've got the opportunity associated with the number of new models people launch and I saw the class Guy on T V about a month ago. He was talking about 30, new models I don't know if you're going to get all of it but every time a new model comes out. This is good business for us and every time they have a warranty you know what kind of recall and stuff like that and that business has been pretty good now.

Nicholas T. Pinchuk: It's demand clues. Fundamentally, it's on a macro basis, Luke. I don't know if it's six months.

Speaker Change: For some time was up nicely in the quarter double digits and our profitability is strong now.

Nicholas T. Pinchuk: This started sometime in October. I don't know how long that is, but the thing is that it's pretty much about what people will say, if I buy this now, I can get a payback now, and I don't get committed for the longer term. So, you know, I'm not. That's the description in general.

Speaker Change: So that's a good bit in it so that's a unique at this point and I think it will keep going as the technology keeps changing then you see the equivalent business equivalent business.

Speaker Change: Wasn't it was up but it wasn't as strongly up because Europe was pummeled by the equipment business those recessionary businesses in Europe, I mean, Germany being a recession was a big blow for us in this situation and so that that was harder that'll come back, but it does have the collision business and the equipment business in North America, all of which are booming.

Nicholas T. Pinchuk: Of course, everything I say about the technicians probably doesn't apply to every, every technician in every garage is probably a great landscape for this. But that's simply what we're doing. And so, we're getting feedback from the franchisees on this, and we're doing a lot of customer connection work on it. I'm talking to franchisees all the time. We'll have the NFAC in here in about four weeks. I'll talk to them about it.

Speaker Change: And those are nice margins the margin was up in that business. So that's fueling some of it and then our software keeps doing pretty well, we talked about the heavy duty software and you know.

Nicholas T. Pinchuk: We're making a lot of calls. So, we're getting feedback from those guys, and we have pretty good feedback right now. We know where we're trying to go. And so we believe that it'll work for us. Of course, it won't all work.

Speaker Change: We did have this.

Speaker Change: Legal benefit which was in this ore and it confirms the proprietary nature.

Speaker Change: Of our database.

Nicholas T. Pinchuk: But once we execute on that, then we'll iterate to hone in. Now, how long that takes, as I said before, I think our view is our standard is to keep improving. I'm not so sure how quickly.

Speaker Change: So I think that's all those things are better than a poke in the eye with a sharp stick.

Speaker Change: Okay.

Speaker Change: I'll leave it there thanks Nick.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Next question is from Sherif <unk> with Bank of America. Please go ahead.

Nicholas T. Pinchuk: But I do think we have the capacity to do it, and we've done it before. And then maybe a question on RS&I, if I can sneak it in, just the expanded opportunity right now, seeing with the OEM dealerships, especially new technologies and new things coming into the market. Just, you know, that seems even more of a secular opportunity. I mean, do you see the opportunity being any different versus this business historically, either in kind of the scope of the opportunity or even the, you know, margin opportunity, maybe?

Sherif: Hey, good morning, Greg how are you.

Sherif: Doing well, thanks, and thanks for all the great color you provided I just had one one small specific question just within power tools are there any specific markets or end uses this one outsized pullback or drove the decline year over year.

Sherif: Again, please sorry.

Sherif: Are there any specific markets or end uses for power tools. They saw an announced nice pullback or stood out when you were kind of bookkeeping numbers.

Nicholas T. Pinchuk: Look, I think, I think three things about Arsenal. One is that you've got the opportunity associated with the number of new models people are launching. I saw this Flannis guy on TV about a month ago.

Speaker Change: No I don't think so I think there is a there is a constant movement.

Speaker Change: Between pneumatic and cordless.

Nicholas T. Pinchuk: He was talking about 30 new models. I don't know how we're going to get all those. But every time a new model comes out, this is good business for us. And every time they have a warranty, you know, a kind of recall, and stuff like that. And that business has been pretty good now for some time. It was up nicely in the quarter, double digits. And the profitability is strong now, you know, so that's a good bit.

Speaker Change: And in the power tools or a lot of people are converting to cordless not everything can be converted the cordless because people want to have continuous power and of course, the pneumatic will keep going so if you're doing something over and over sometimes people prefer nomadic guns, because they don't they don't run out of battery and they're lighter and all that stuff. So if.

Speaker Change: Repetitive situations, but there is a general motion to cordless, we haven't seen any if you look at the nature of the product line.

Nicholas T. Pinchuk: And so that's unique at this point. And I think it will keep going as the technologies keep changing. Then you see the equipment business. The equipment business was off, but it wasn't as strongly up because Europe was pummeled by the equipment business. Those recessionary businesses in Europe, I mean, Germany being in a recession was a big blow for us in this situation. And so that was hard.

Speaker Change: Alex and power tools, what you see is <unk>.

Sales that follow introduction of new products. So every time you bring out a new product that tends to raise that particular category I haven't seen much of a particular pull back I think the need for power tools and industrial settings, and critical industry settings remains moving a pace and and in in the garages.

Nicholas T. Pinchuk: And that will come back. But it does have the collision business and The Equipment Business in North America, all of which are booming. And those are nice margins. The margin was up in that business, so that's fueling some of it. And then our software keeps doing pretty well. We talked about heavy duty software, and, you know. We did have this, you know, legal benefit, which was in this orb, and it confirmed the proprietary nature of our data. You know, so I think that all those things are better than a poke in the eye with a sharp stick.

Speaker Change: Less so because of the aforementioned uncertainty that's all that's the only color I can add from that situation.

Speaker Change: Thank you I appreciate it sure.

Speaker Change: The next question is from Bret Jordan with Jefferies. Please go ahead.

Bret David Jordan: Hey, good morning, guys.

Bret David Jordan: I don't think we've touched on the sell in versus sell out on the U S franchise tools do you have any color as far as what their Pos looked like versus their take rate.

Nicholas T. Pinchuk: I'll leave it there. Thanks, Nick. Okay. The next question is from Sherif El Sabahi with Bank of America. Please go ahead. Hey, good morning. How are you?

Bret David Jordan: I'm not sure what do you mean by all point of sale. Okay. Yeah look sell off the van was better.

Bret David Jordan: And then our sell throughs of that this quarter.

Bret David Jordan: Particularly towards the end so that that's you know we sold we are our franchisees sold more off their bands then they bought.

Sherif Abdul: Doing well, thanks. And thanks for all the great color you've provided. I just had one small specific question just within power tools. Are there any specific markets or end uses that saw an outsized pullback or drove the decline year over year?

Bret David Jordan: In this situation.

Bret David Jordan: Okay, and I guess at that.

Bret David Jordan: And that gap.

Bret David Jordan: Expanded a little bit.

Bret David Jordan: We went forward in the quarter.

Sherif Abdul: Sorry. Are there any specific markets or end uses for power tools that saw an outsized pullback or stood out when you were kind of looking at the numbers? No, I don't think so. I think there is a constant movement between pneumatic and cord in the Power Tools Orb. A lot of people are converting to cordless. However, not everything can be converted to cordless because people want to have continuous power, and, of course, the pneumatic will keep going.

Bret David Jordan: And I guess theres sell out rate how do you think that compares to the general market growth rate I guess, where do you think youre keeping up from a market share standpoint.

Bret David Jordan: Or is there any shift there you know I don't know you may have a better view that look if you talked I just thought I thought that we talked with 36 franchisees.

Bret David Jordan: And none of them.

Bret David Jordan: Mentioned I'm, losing share.

Bret David Jordan: No.

Bret David Jordan: Mentioned I'm, losing share.

Speaker Change: I don't think I don't think that's happening although you know.

Speaker Change: These are wins these are windshield surveys and not based on data, but they don't seem to be in that situation I can say there.

Nicholas T. Pinchuk: So if you're doing something over and over, sometimes people prefer pneumatic guns because they don't run out of battery and they're lighter and all that stuff, so if you have repetitive situations. But there's a general movement toward cordless. Sales that follow the introduction of new products; every time you bring out a new product, that tends to raise that particular category. I haven't seen much of a particular pullback. I think the need for power tools in industrial settings, in critical industry settings, remains growing apace, and in the garage, it is less so because of the aforementioned uncertainty. That's all. That's the only color I can add to it.

Speaker Change: Their view is wow tougher to sell because people are buying you know I don't have the big ticket items I used to I used to sell in that.

Speaker Change: Carbs down my product line that I can get people to move on.

Speaker Change: Okay, and there seems to be a little gap between with the macro numbers at the end of last year, so they're not commenting about mapco, becoming more aggressive as far as pushing their volume.

Speaker Change: Nobody's, saying that.

Speaker Change: I don't know the macro guys are smart guys they might be able to they may have some sort of magic here. We don't know, but you know every place you know it's hard to what we've found is that we never really pay too much view of that over one quarter. Those things go up and down so I don't know I can't really comment on their business, but I'm not hearing anything.

Sherif Abdul: Thank you. I appreciate it. The next question is from Bret Jordan with Jefferies. Please go ahead.

Bret David Jordan: Hey, good morning, guys. I don't think we've touched on the sell-in versus sell-out on the U.S. franchise tools. Do you have any color as far as what their POS looked like versus their take rate?

Speaker Change: From our franchisees that would indicate that's a problem for us.

Speaker Change: Okay great.

Nicholas T. Pinchuk: I'm not sure what you mean by, oh, point of sale. Okay, yeah, uh, look, selling off the van was better than our selling to the van this quarter, particularly toward the end. So that's, you know, we sold we sold more off their vans than they bought in this situation. Okay, and I guess that gap expanded a little bit.

Speaker Change: Generally we think that we sell to different people anyway.

Speaker Change: Alright, Thank you Sir.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Sara <unk> for any closing remarks.

Sara: 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.

Nicholas T. Pinchuk: As we went forward in the quarter, and I guess their sellout rate, how do you think that compares to the general market growth rate? I guess I do think you're keeping up from a market share standpoint, or is there any shift there? You know, I don't know, you may have a better view.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

Speaker Change: [music].

Nicholas T. Pinchuk: Look, if you talk, I just talked, I said that we talked to 36 franchisees, and none of them mentioned that they were losing share. Nobody mentioned that they were losing share. So I mean, I don't think I don't think that's happening.

Nicholas T. Pinchuk: Although, you know, these are windshield surveys and not based on data, but they don't seem to be in that situation. They can say, you know, their view is, well, tougher to sell because people aren't buying, you know, I don't have the big ticket items I used to sell, and that, you know, carves down my product line that I can get people to move on. Okay, there seems to be a little gap between the Madco numbers at the end of last year. So they're not commenting on Madco becoming more aggressive as far as pushing their volume. Nobody's saying that,

Nicholas T. Pinchuk: You know, I don't know. The Macro guys are smart guys. They may be able to, they may have some, some magic if we don't know, but you know, every place, you know, it's hard to, all we've found is that we never really pay too much attention to that over one quarter.

Speaker Change: Sure.

Speaker Change: [music].

Bret David Jordan: Those things go up and down, so I don't know. I can't really comment on their business, but I'm not hearing anything from our franchisees that would indicate that there's a problem. Great, thank you. Generally, we think that we sell to different people. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Sara Verbsky for any closing remarks. Thank you all for joining us today. A replay of this call will be available shortly on Snap-On.com. As always, we appreciate your interest in Snap-On. Good day.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Sara M. Verbsky: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Copyright 2020 Mooji Media Ltd. All Rights Reserved.

Operator: © The Ultimate Parody Site! Unknown Attendee, Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning and welcome to the Snap-On Incorporated 2024 first quarter results conference call. All participants will be in listen only mode.

Speaker Change: Okay.

Operator: And should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your telephone keypad.

Speaker Change: [music].

Sara M. Verbsky: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Speaker Change: Okay.

Speaker Change: [music].

Sara M. Verbsky: Thank you, Gary, and good morning, everyone. We appreciate you joining us today as we review Snap-On's first quarter results, which are details 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. Aldo will then provide a more detailed review of our financial results.

Speaker Change: Yes.

Speaker Change: [music].

Sara M. Verbsky: 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, snapon.com, under the Investor section.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Sara M. Verbsky: 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 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 the forward-looking statements are contained in our SEC filings.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

[music].

Sara M. Verbsky: 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 issued today, which can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Speaker Change: Okay.

Speaker Change: [music].

Nicholas T. Pinchuk: Thanks, Sarah. Good morning, everybody. As usual, I'll start with the highlights of our first quarter. I will provide my perspectives on the results, on our markets, and our path ahead. After that, Aldo will give you a detailed review of the financials. We believe that our first quarter once again demonstrated Snap-On's ability to maintain its strength, to withstand headwinds, to manage challenges, and to leverage the multiple opportunities of our market. Looking at the results in total, we are encouraged.

Speaker Change: Good morning, and welcome to the snap on incorporated 2024 first quarter results conference call.

Speaker Change: Participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to.

Nicholas T. Pinchuk: Like most quarters, we had turbulence from geography to geography and from operation to operation. North America was mixed, but with significant gains in critical industries. Internationally, our consolidated results were also mixed, but yielding overall positive results as our operations in Europe and Asia overcame the effects of recessions in Europe and the delayed recovery in China. Now for the results.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Please note this event is being recorded.

Now I'd like to turn the conference over to Sara <unk>, Vice President Investor Relations. Please go ahead.

Nicholas T. Pinchuk: First quarter sales were $1,182,300,000, about flat to last year. On an organic basis, excluding $6.7 million from acquisitions and $2.5 million from favorable foreign currency, our sales were lower by 0.8%. OpCo OI was $270.9 million, an increase of $11.1 million, and the OpCo operating margin for the quarter was 22.9%, up 90 basis points. Now both those numbers benefited from the legal payment referenced in our release, but with or without that legal flow, our first quarter OpCo OI and the margin were among our best. It's a strong statement given the turbulence of the day.

Sara: Thank you Gary and good morning, everyone. We appreciate you joining us today as we review snap ons first 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 Aldo Polyarchy Snap ons, Chief Financial Officer, Nick will kick off our call. This morning with his perspective.

Sara: On our performance, although will then provide a more detailed review of our financial results. After Nick provides some closing thoughts we'll take your questions as usual we've provided slides to supplement our discussion. These slides can be accessed under the downloads tab in the webcast viewer as well as on our website snap on dot com under the investors section.

Sara: 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 are 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.

Nicholas T. Pinchuk: Financial Services. Operating income grew to $68.3 million from last year's $66.3 million. And the result, combined with OPCO, raised our consolidated operating margin to 26.5%, up over the 25.6% recorded last year. It was $4.91, including a per share benefit from a legal payment of $0.16, but up $0.31, or 6.7% from last year. So those are the numbers.

Sara: Cause our results to differ materially from those in the forward looking statements are contained in our SEC filings. Finally this presentation includes non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our earnings release issued today.

Nicholas T. Pinchuk: Now let's turn to the markets and the trends we're seeing as we connect with our customers. From an overall perspective, we believe the automotive repair arena remains favorable. Vehicle OEMs and dealerships continue investing in tools and equipment, preparing for the tide of new models, bringing the latest technologies and drivetrains to the market. And in the quarter, our Repair Systems and Information Group, or RS&I, as we call it, expanded its reach into OEM programs and took advantage of opportunities throughout its global footprint.

Sara: 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.

Good morning, everybody.

Nicholas T. Pinchuk: As usual I'll start with the highlights of our first quarter I'll provide my perspective on our results on our markets and our path ahead. After that Aldo will give you a detailed review of the financials.

Nicholas T. Pinchuk: And as we look forward, we see further prospects for RS&I capitalizing on that trend, supplying dealerships and independent garages with just the products they need to face the wave of modern platforms that are coming. So the shops are strong. Now let's speak of the techs, the guys and gals that twirl the wrenches, punch the keys, or tap the screens. This quarter, I had multiple opportunities to visit with franchisees. And the report was generally that shops are humming, the bays are running at full capacity, and all that mirrors what the macro data says nationally. However, the car park is continuing to age.

Nicholas T. Pinchuk: We believe that our first quarter once again demonstrated snap ons ability to maintain its strength to engage headwinds to manage challenges and to leverage the multiple opportunities of our markets looking at the results. In total we are encouraged like most quarters, we had turbulence from geography to geography.

Nicholas T. Pinchuk: Aggregate and from operation to Operation North America was mixed but with significant gains in critical industries internationally are our consolidated results were also mix mix, but yielding overall positives as our operations in Europe, and Asia overcame the effects of recessions in Europe, and the delayed recovery in China.

Nicholas T. Pinchuk: Now, at an average of 12 12 years, and I think that number is rising, technician wages are rising, and their hours worked are increasing. We believe it all signals ongoing and robust demand for repair, and you know it's true. The activity is strong.

Speaker Change: Now the results.

Speaker Change: First quarter sales of $1 billion, one our agent 3 million about flat to last year on an organic basis, excluding $6 7 million from acquisitions and $2 5 million from favorable foreign currency. Our sales were lower by <unk>, 8% Opco Oi was 279 $279 million an increase of 11.

Nicholas T. Pinchuk: But there is a difference between the industry overview and the technician outlook for the future. And by extension, they're purchasing sentiment. The barrage of bad news. inflation, two wars, the border, the Red Sea, the elections. The U.N. bombing. For the people of work, the fear of what's coming around the corner impacts their outlook. And, paraphrasing the characters of Dune, fear is the outlook killer. It erodes confidence.

Speaker Change: $1 million in the Opco operating margin for the quarter was 22, 9% up 90 basis points.

Speaker Change: Now both those numbers benefited from the legal payment referenced in our release.

Speaker Change: But.

Speaker Change: But with or without that legal flow, our first quarter Opco Oi margin Oi and the margin were among our best.

Speaker Change: It's a strong statement given the turbulence of the de.

Speaker Change: Financial services operating income grew to $68 3 million from last year's $66 3 million and the result, combined with Opco to raise our consolidated operating margin to 26, 5% up over up over the 25, 6% recorded last year and EPS. It.

Nicholas T. Pinchuk: Techs are well positioned, and they continue to invest, but it's a quick payback item that will make a difference right away, but doesn't require a long-term payment. And in response, we continue to redirect the tools group's focus in our design efforts, in our facility capacity, and in our selling and marketing efforts, working to match current customer preferences. So that's the auto repair. Now a commercial industrial group, or what we call C&I, serving critical industries and the most international of all our groups. And in the quarter, CNI manages the difficult challenge of balancing multiple economies that are in economic turbulence. You know, Europe now has.

Speaker Change: It was $4 91 <unk>.

Speaker Change: Including a per our per share benefit from a legal payment of <unk> 16.

Speaker Change: But up 31 or six 7% from last year. So those are the numbers.

Speaker Change: Now, let's turn to the markets and the trends, we're seeing as we connect with our customers.

Speaker Change: From an overall perspective, we believe the automotive repair arena remains favorable vehicle OEM and dealership continue investing in tools and equipment preparing for the tie to new model, bringing the latest technology and drivetrains to the market and.

Nicholas T. Pinchuk: More than half a dozen countries are in a technical recession, and then China and the Chinese environment, including the nearby countries, depending on it, they continue to struggle. India, on the other hand, is booming. Modi has the train running. So that's a positive in Asia amidst some very difficult economies. So that's the geography.

Speaker Change: And in the quarter, our repair systems, and information group or arent and I as we call. It expanded our reach into OEM programs that took advantage of the opportunities throughout its global footprint and as we look forward, we see further prospects for us and I capitalizing on that trend supplying dealerships and independent garages with just the products they need to confront.

Nicholas T. Pinchuk: Now let's focus on the second. Areas like aviation continue to be strong. You don't have to read the paper very long to realize there's a significant focus on aerospace production and repair, where the price for failure is high. And that industry is increasing demand for our precision torque products and for our asset control solutions to improve safety and productivity. In addition, in that sort of critical arena, custom kits, matching a set of items to a particular task, remain an important business, especially for the military, both domestically and internationally.

Speaker Change: The wave of modern platforms that are coming.

Speaker Change: So the shops are strong.

Speaker Change: Now, let's speak of the technician.

Speaker Change: The guys and gals at Toro, the wrenches punch, the keys or tap the screens this quarter, Ed I have multiple occasions to visit with franchisees.

Speaker Change: And the report was generally that shops or Harman the bays are running at full capacity and all of that mirrors, what the macro data says naturally the car park is continuing to age now at an average of 12 five years and I think moving up technician wages are rising and the hours worked are increasing we believe it all signals.

Nicholas T. Pinchuk: And with that, critical industries are a substantial opportunity. And we are investing, expanding capacity, adding new products either organically or through the acquisitions we've made over the last few years. We're fortifying our runways for growth, extending outside the garage, and we know it's paying off. So overall, the quarter was favorable despite the headwinds.

Speaker Change: Ongoing and robust demand for repair.

Speaker Change: And you know it's true.

Speaker Change: The activity is strong.

Speaker Change: But there is a difference between the industry overview and the technician outlook for the future and by extension repurchasing sentiment the.

Speaker Change: The barrage of bad news inflation towards the border the Red Sea the election.

Speaker Change: Iran bombing.

Speaker Change: For the people of work the fear of what's coming around the corner impacts the outlook and paraphrasing the characters.

Nicholas T. Pinchuk: Tools group pivoting, RSI expanding with OEM, C&I extending beyond the garage, solving the critical. And the OSCO OI percentage demonstrated once again the power of Snap-On's value creation processes, safety, quality, customer connection, innovation, and rapid continuous improvement. Developing innovative solutions that are born out of insight and observations right in the workplace. This understanding, melded with RCI, helps Snap-On to once again hold fast in the turbulence of the day. Well, that's the macro overview.

Speaker Change: June fear is the outlook killer.

Speaker Change: And our roads confidence takes a well positioned and they continue to invest but it's been quick payback items that will make a difference right away, but don't require a long term payment stream.

Speaker Change: And in response, we are continuing to to redirect that we continue to redirect with Google's Cross group focus in our design effort and are fully capacity and our selling and marketing efforts working to match the current customer preference.

Speaker Change: So that's the auto repair now our commercial industrial group are what we call C&I, serving critical industries in our most international of all our groups and in the quarter C&I manages the difficult challenge of balancing multiple economies that are an economic turbulence.

Nicholas T. Pinchuk: Now let's move to the segment and the CNI. Sales were $359.9 million, representing a decrease of $3.9 million, or 1.1%, and that included $6.7 million in acquisitions and acquisition-related sales, $1.4 million in unfavorable foreign currency, and an organic decline of 2.5%. It all reflects higher activity with customers in critical industries, more than offset by weakness in Asia-Pacific. From an earnings perspective, C&I operating income was $55.4 million; that was about the same as last year.

Speaker Change: Europe now had.

More than half a dozen countries and technical recession, and then China, and the China environment, including the nearby countries, depending on it they continue to struggle.

Speaker Change: On the booming multi has the train running so that's a positive in Asia amidst some very difficult economies.

Speaker Change: So thats the geographies now let's focus on the sectors.

Speaker Change: Areas like aviation continues to be strong.

Speaker Change: You don't have to read the paper very long to realize there is a significant focus on aerospace production and repair where the price for failure is high.

Nicholas T. Pinchuk: The operating margin was 15.4%, up 10 basis points, and that was despite 30 basis points of headwind from currency and the acquisition. Within the quarter, the demand for custom kits addressing particular critical tasks remains, you know, nicely robust, with increased demand for F-control solutions like our automatic tool control product. It was a nice, bright spot in Seattle.

Speaker Change: And that arena is increasing demand for our precision torque products and for our asset control solutions to improve safety and productivity.

Speaker Change: In addition in that sort of critical arena custom kits matching instead of items to a particular task remains an important business, especially for the military both domestically internationally and with that critical industries is a substantial opportunity and we are investing expanding capacity, adding new products either organically.

Nicholas T. Pinchuk: On the other hand, Power Tools was down in the quarter, but help is on the way. Two new power tool models born out of customer connection were recently introduced, each fulfilling specific needs for each fulfilling specific needs. For repair garages, we launched the PH-3045B air hammer. This is a tool that replicates the effect of swinging a hammer and hitting a chisel, except the device hurls the hammer 3,500 times a minute. Vehicles are filled with components like ball joints, wheel bearings, and suspension bushings that are packed in tight spaces for maximum efficiency.

Speaker Change: Through the acquisitions, we made over the last few years.

Speaker Change: We're fortifying our runways for growth extending outside the garage.

Speaker Change: And we know it's paying off.

Speaker Change: So overall the quarter was favorable despite the headwinds tools group pivoting rsi, expanding with Oems C&I extending beyond the garage solving the critical.

Speaker Change: <unk> percentage demonstrate once again, the power of snap on value creation processes safety quality customer connection innovation and rapid continuous improvement.

Speaker Change: Developing innovative solutions that are born out of insight and observations right in the workplace. This understanding melded with RCI help snap on to once again, a whole fast and the turbulence of the day.

Nicholas T. Pinchuk: Disassembly can be a bear. We know this from being in the garage. Well, with our new air hammer, the easy-to-use retainer securely holds the chisel in place while the piston sledgehammers away. It's powerful, but at the same time, the compact two-inch barrel enables access in tight spaces, delivering tremendous power, speed, and energy with an unlimited run time. It's a real productivity enhancer, but the essential feature, born out of watching the technicians in the shop, is the best-in-class vibration reduction created by special elastomer shocks, allowing the mechanic to pound away at seized suspension components without fatigue or pain. No more sore arms from hammer work.

Speaker Change: Well, that's the macro overview now let's move to the segments.

Speaker Change: In the C&I group.

Speaker Change: Sales were $359 9 million, representing a decrease of $3 9 million or one 1% and that includes $6 7 million.

Speaker Change: And acquisitions acquisition related sales $1 4 million and unfavorable foreign currency and an organic decline of two 5%. It all reflects higher activity with customers in critical industries more than offset by weakness in Asia Pacific and our power tools.

Speaker Change: From an earnings perspective, C&I operating income was $55 4 million that was about the same as last year. The operating margin was 15, 4% up 10 basis points and that was despite 30 basis points of headwind from currency and the acquisitions.

Nicholas T. Pinchuk: The new hammer was introduced late in the quarter, and techs have already noticed it. Also in Power Tools, our cordless portfolio expanded with the introduction of a new 18-volt nibbler designed for collision repair and metal fabrication. It's a big time-saver. It speeds up work that, you know, once involved hand shears or other devices to help technicians cut any free-form shape conceivable out of tough sheet metal. Again, the design resulted from customer connection, from watching the tech struggle with shears.

Speaker Change: Within the quarter the demand for custom kits addressing particular critical path remain.

Speaker Change: <unk> nicely robust with increased demand for risk control solutions like our automatic tool control products.

Speaker Change: It was a nice bright spot in C&I on the other hand power tools was down in the quarter, but help us on the way.

Speaker Change: Tuning power tool models born out of customer connection, we recently introduced each fulfilling specific needs for each fulfilling specific needs.

Nicholas T. Pinchuk: Our new Nibbler makes a big difference when cutting into fenders, extracting a damaged panel, or cutting the ceiling of a car, accommodating the installation of a sunroof, or creating a place anywhere in the vehicle for placing emergency lighting, shining the way for first responders.

Speaker Change: For repair garages, we launched the ph 30, 45 B Air Hammer. This is a tool that replicates the effect of swinging a hammer and hitting a chisel, except the device hurdles. The hammer 3500 times a minute.

Nicholas T. Pinchuk: I have to tell you, I have to tell you, we're encouraged by these innovative new products and by all the others we're planning to introduce as the days go forward. We know they will work, and they all will make a difference right away, confronted with international headwinds, strong momentum in domestic markets, led by critical industries extending out of the garage with growing strength. Now, let's talk about the. The first quarter for the tools group was below our standard. However, we do remain confident, and we do see a pivot to focus on quick payback items registering positive momentum and movement. Sales in the quarter were $500.1 million, reflecting an organic decrease of 7%.

Speaker Change: Vehicles are filled with components like ball joints wheel bearing suspension bushings that are packed in tight fit for maximum efficiency. This assembly can be a bear.

Speaker Change: We know this from being in the garage well with our new Air Hammer the easy to use retain are securely holds the chisel in place while the piston sledge amyris away, it's powerful but at the same time the compact two inch barrel.

Speaker Change: The two inch barrel enable to access in tight spaces, delivering tremendous power speed and energy.

Speaker Change: With unlimited runtime.

Speaker Change: It's a real productivity enhancer, but the essential feature born out of watching their technicians in the Sop is the best and best in class vibration reduction created by special elastomer shops, allowing a panicked a pound the way it sees suspension components without the teague are paying no more sore arm <unk> hammer work the new Hammer was introduced late in.

Nicholas T. Pinchuk: The group's operating income margin was 23.5%, down 100 basis points. Notably, gross margin in the quarter rose 90 basis points, reaching 48.2%. You see, shorter payback arguments aren't shorter on profitability.

Speaker Change: The quarter and techs have already noticed.

Also on power tools, our cordless portfolio expanded with the introduction of a new 18 volt nibbler designed for collision repair and metal fabrication and it's a big time saver. It speeds up work that once involve Hans shares or other device submission cut any freeform shake conceivable out of top sheet metal.

Nicholas T. Pinchuk: During the quarter, we worked to redirect our plans, guide our franchisees to innovative solutions that drive productivity, and we kept engaging our customer connection, observing the tasks executed in the Bay and using the insights to design and deploy innovative and focused products. Offerings that are dedicated to making work easier, like two new products engineers have just engineered to address time-consuming tasks where simple repairs are made complex by limited accessibility or by seized components that slow the work to a snail's pace. We can see it in the garage. For instance, on General Motors 6L80 and 8L80-90 transmissions, the valve body bolts are obstructed by the exhaust setup, making it very difficult to do this job with a standard ratchet or socket combination.

Speaker Change: Again, the design resulted from customer connection from watching the tech struggle with shares our new Nibbler makes a big difference when putting in defenders extracting and damaged panel or cutting a ceiling of a car accommodating installation of a sunroom or creating a place anywhere in the vehicles for placing emergency lighting shining the way.

Speaker Change: For first responders I have to tell you.

Speaker Change: To tell you we're encouraged by these innovative new products and by all the others were planning to introduce as the days go forwards, we know work and they all will make a difference right away.

Nicholas T. Pinchuk: We were in some of those GM garages and observed the problem firsthand. Classic customer connection and the innovation that followed, in our quarter inch drive Torx Torx plus EPL 10 low profile inverted socket. That's a mouthful.

Speaker Change: C&I.

Speaker Change: Quarter confronted with international headwinds strong momentum in domestic markets led by critical industries extending out of the garage with growing strength.

Nicholas T. Pinchuk: That innovation was released in the first quarter, and it does make GM transmission work easier. The new cushion design precisely maneuvers, the new custom design precisely maneuvers between the exhaust assembly and the transmission and locates the fastener in such a way that provides enough clearance for a ratcheting box or box wrench, a box end wrench, or a hand ratchet to access the bolts for easy removal with no exhaust disassembly required, saving more than 45 minutes per repair right away. Techs working on GM transmissions can complete more work with this device and make more money. They can do that right away, and get quick payback.

Speaker Change: Now, let's talk about the tools group.

Speaker Change: The first quarter for the tools group was below our standard.

Speaker Change: However.

Speaker Change: We do remain confident and we do see a pivot to focus on quick payback items registering a positive momentum.

Speaker Change: Our momentum in removing.

Sales in the quarter were $500 1 million and including <unk>.

Speaker Change: <unk> reflected in an organic decrease including an organic decrease reflecting an organic decrease of 7%. The groups operating income margin was 23, 5% down 100 basis points.

Nicholas T. Pinchuk: Another example we saw, another example of that was that removing the brake caliber pins on Toyota trucks and sports utility vehicles was very difficult. The pins on 4Runners, Tacomas, and Tundras are exposed to harsh road environments, often causing the parts to become immovable, regularly requiring heat or excessive force to free the restricted fasteners, and each of those methods requires time, and it raises the risk of damage to nearby components, often escalating the complexity of the repair, taking a lot more time.

Speaker Change: Notably gross margin in the quarter Rose 90 basis points, reaching 48, 2% you see shorter payback volumes arent shorter on profitability.

Speaker Change: During the quarter, we work to redirect our plants guide our franchisees to innovative solutions that drive productivity and we kept engaging our customer connection observing the task executed in the bay and using the insights to design and deploy innovative and focused products.

Speaker Change: Offerings that are dedicated to making work easier like do new products. Just engineers, just engineered too to address time consuming task with simple repairs are made complex by limited access to build make complex by limited accessibility whereby sees components that slow a little work to a snail's pace.

Nicholas T. Pinchuk: Watching the work, our engineers produced a unique punch-like bit that precisely aligns an air hammer with the dimensions of the pin, maximizing the extraction force without endangering the surrounding systems, once again, simplifying the task and freeing the tech to move on to other jobs. It's another quick payback item that's now available and popular. Finally, in the quarter, we expanded our only, the only, US-made locking plier lineup by releasing two new models, the LP5LN, constructed with a tapered nose that's ideal for additional reach inside confined spaces to easily access narrow workpieces, and the new LP5WC, delivering reliable gripping power to difficult-to-engage round objects like hoses.

Speaker Change: You can see it in the garage.

Speaker Change: For instance, on General Motors six L. A D and a lady 90 transmissions.

Speaker Change: The valve body bolt bolts are are obstructed by the exhaust setup, making very taxing to do this job with a standard ratchet Osaka combination.

Speaker Change: In sum we were in some of those GM garages and observe the problems firsthand classic customer connection.

And the innovation that followed.

Speaker Change: In our quarter inch drive torque towards plus EPL 10, low profile inverted socket, that's a mouthful.

Nicholas T. Pinchuk: Beyond the special features of those two models, the full line offers... Our subcompact 6-inch plier line offers increased accessibility because it's small, enabling techs to maneuver in crowded engine compartments and under the dash. The designs also provide unmatched clamping force that locking pliers, unmatched clamping forces that will not slip under load with the locking mechanism. The pliers also serve as a second pair of hands.

Speaker Change: That innovation was released in the first quarter and it does make GM transmission work easier the new kitchen design precisely maneuver the new custom design precisely maneuvers between the exhaust assembly in the transmission and gazing the fastener.

Speaker Change: In such a way that provides enough clearance for a ratcheting box or box rents Blackstone ranch or a hand ratchets to access the bolts for easily removal with no exhaust this assembly required saving more than 45 minutes.

Nicholas T. Pinchuk: You can lock them up, lock it up, holding material securely in place, freeing up the technician's hands to complete another step in the repair. And each unit, each of those locking plier units is forged and produced at an Elkmont, Alabama plant, and they're the only locking models made in the U.S. Well, that is the tool, pivoting to match the technician's current preferences and needs, wielding our customer connections, deploying solutions that improve efficiency by making tasks Now, our results are confirmed, I think.

Speaker Change: For repair right away.

Speaker Change: Texts working on GM transmissions can complete more work.

Speaker Change: With this device.

Speaker Change: And make more money.

Speaker Change: They can do that right away.

Speaker Change: Payback. Another example, we saw another example of that was we saw that removing the brake caliber pins on Toyota trucks and sports utilities was very difficult the pins on floor runners Tacoma and tonnages are exposed are exposed to harsh road environment, often causing the parts to become immovable regularly.

Nicholas T. Pinchuk: We've been saying all along that Snap-On is well-positioned to support repair shops, both dealers and the vast networks of independent shops. And in that regard, RS&I sales in the quarter were $463.8 million, up $17.2 million, or 3.9% versus last year, with an organic sales increase of 3.3%. Operating earnings for the group reached $112.9 million, reflecting an increase of $8.3 million, or 7.9% versus last year. The operating income margin was 24.3%, rising by 90 basis points.

Speaker Change: Requiring like heat or excess of forced to free the restricted fasteners and each of those messes requires time and it raises the risk of damage to nearby components, often elevating the complexity the repair taking a lot more time watching the work our engineers produced the unique punch like bit that precisely alliance.

Speaker Change: Hammer with the dimensions of the pen maximizing the extraction force without endangering the surrounding systems. Once again, simplifying the task and freeing the tech to move on to other jobs to another quick payback. The item that is now available in popular finally in the quarter, we expanded our only the RMB only U S made locking.

Nicholas T. Pinchuk: A powerful performance, driven by OEM-related activity and sales in undercars, while helping shops prepare for new technology. You know, in terms of OEM-related activity in sales and undercar, helping shops prepare for new technologies and enabling system upgrades in the growing collusion market. We continue to see abundant runways for growth in RS&I, and we're working to take advantage of them. One example of that is the launch of our new heavy-duty repair information software.

Speaker Change: <unk> lineup by releasing two new models the L. P five L and constructed with the taper knows.

Speaker Change: Deal for additional reach inside compliance space to easily access narrow work pieces and the new <unk> WC delivering a reliable gripping power power to difficult to engage round objects like hoses.

Speaker Change: Beyond the special features of those two models.

Speaker Change: The full line.

Nicholas T. Pinchuk: This package combines the vehicle interface capabilities of our NEXIC heavy-duty diagnostic units with the horsepower of our Mitchell-1 information database. It's an innovative solution for the repair and heavy-duty industry, which has seen an explosion of new technologies relating to sophisticated emission control, along with advanced computer and electrical networks that all combine to present heavy mechanics with complex and complicated repair tasks. Now the solutions are now. The solution's all located in one spot.

Speaker Change: Offers.

Speaker Change: Our <unk>.

Speaker Change: <unk> six inch Plier line offers.

Speaker Change: Creased accessibility and make because it's small enabling text of maneuver in crowded engine compartments and under the dash. The designs. The designs also provide unmatched clamping forces.

Speaker Change: Locking pliers unmatched clamping forces that will not slip under load with the locking mechanism suppliers also serve as a second pair of hands you can lock them up locking up holding materials securely in place freeing up you up the technician enhance the completed another step in the repair and.

Nicholas T. Pinchuk: Tests can search by VIN number and access operating specifications, troubleshooting tips, and interactive wiring diagrams, all large, specific to the particular vehicle, all big time-saving. This new product was deployed in the quarter, and it's a groundbreaking integrative platform that combines diagnostic capability together with vehicle information. It's very powerful, and I can tell you the heavy-duty industry has noticed. You can see it in the RS&I number. And in the quarter, our Diagnostic Division also released its latest 24.2 software upgrade, expanding our broad range of vehicle coverage and test procedures across all our existing hardware.

Speaker Change: Each unit each of those locking Plier unit is forged and produced our elmont, Alabama plant and they're the only locking models made in the U S.

Speaker Change: Well that is the tools group pivoting to match the technician's current preferences and needs wielding our customer connections deploying solutions that improve efficiency by making path easier.

Speaker Change: Now our F&I.

Speaker Change: Our F&I group's results confirmed I think what.

Speaker Change: What we've been saying all along snap on is well positioned to support repair shop, both dealers and the best networks of independent shops and in that regard <unk> sales in the quarter were $463 8 million up $17 2 million or three 9% versus last year with an organic sales increase of three 3% operating earnings for the group reached.

Nicholas T. Pinchuk: The new upgrade strengthens our already market-leading data. Technicians get access to our SureTrack vehicle-specific real fixes, repair tips, and commonly replaced parts, all derived from our proprietary database of 2.7 billion repair actions and 355 billion data records. Unmatched insight, not only to interpret what the vehicle trouble codes are saying, but to uniquely use the information to determine the exact problem. Analyzing millions of data lines per car, predicting the most likely repair. Snap-On uniquely provides this capability, and in its latest update, we continue adding new models and functionalities, making our proprietary software position even more effective and more powerful.

Speaker Change: $112 9 million, reflecting an increase of $8 3 million or seven 9% versus last year. The operating income margin was 24, 3% rising by 90 basis points.

Speaker Change: A powerful performance driven by OEM related activity and sales in under car.

Speaker Change: Helping shops prepare for new technologies.

Speaker Change: Terms of OEM related activity and sales in under car, helping shops prepare for new technologies that are enabling system upgrades and the growing collision market. We continue to seek to clearly see abundant runways for growth in RF and I and we're working to take advantage of.

Speaker Change: One example of that is the launch of our new heavy duty repair information software package combined with vehicle interface capabilities of our <unk> heavy duty diagnostic units with the horsepower of our Mitchell one information database, it's an innovative solution for repairing heavy duty industry, which over the past decade has seen an explosion of new technologies relating to <unk>.

Nicholas T. Pinchuk: We're confident in the strength of RS&I, and we keep driving to expand its positions with repair shop owners and managers to make work easier with more and more great new products. Well, that was Snap-On's first quarter. Sales were flat, overcoming the significant headwinds, and critical industries advancing again. The tools group pivoted, matching the preference for quick payback products.

Speaker Change: Mr gated emission control along with advanced computer in electrical and at networks that all combines to present heavy mechanics.

Speaker Change: Complex and complicated repair test.

Speaker Change: Now the solutions now.

Nicholas T. Pinchuk: OEM undercard and repair information markets remaining robust. The opco OI margin was 22.9%, up 90 basis points, and an EPS of $4.91. Strong results that overcame the headwind and benefited from a legal out, all demonstrating the strength in the midst of turbulence. It was an encouraging quarter. Now I'll turn the call over to Aldo. Aldo?

Speaker Change: With solutions all located in one spot tests can search by Vin number and access operating specification troubleshooting kits and interactive wiring die diagrams all big.

Speaker Change: Specific to a particular vehicle all big time savers.

Speaker Change: This enterprise is deployed in the quarter and it's a it's a groundbreaking integrated platform that combines diagnostic capability together with vehicle information, it's very powerful and I can tell you the heavy duty industry has noticed.

Speaker Change: You can see it in the <unk> numbers and.

Speaker Change: And in the quarter, our diagnostic Division also released its latest 24 that two software upgrade expanding our broad range of vehicle coverage in test procedures throughout all our existing hardware the new upgrade strengthens our already.

Aldo J. Pagliari: Thanks Nick. Our consolidated operating results are summarized on slide 6. Net sales of $1,182,300,000 in the quarter compared to $1,183,000,000 last month, reflecting an eight-tenths of 1% organic sales decline, partially offset by $6.7 million of acquisition-related sales and $2.5 million of favorable foreign currency translation. Activity in our automotive repair markets was mixed.

Speaker Change: Market, leading data position Teck.

Speaker Change: Technicians get access to to our short track vehicle specific real fixes repair kits and commonly replaced part all derived from our proprietary database of $2 7 billion repair actions and 355 billion data records unmatched insight not only to interpret what the vehicle trouble codes are saying.

Aldo J. Pagliari: Gains in sales to OEM and independent shop owners and managers were more than offset by lower sales to technicians through our franchise van channel. However, within the industrial sector, or our C&I group, sales to customers in critical industries were up mid-single digits in the quarter as compared to last year. Consolidated gross margin of 50.5% improved 70 basis points from 49.8% last year, primarily reflecting benefits from lower material and other costs and savings from the company's RCI initiatives.

Speaker Change: But to uniquely use the information to determine the exact problem analyzing millions of data lines per car predicting the most likely repair snap on uniquely provide this capability and then this latest update we continue adding new models and functionalities, making our priority software position, even more effective and more.

Speaker Change: More powerful.

Speaker Change: We're confident in the strength of our C&I and we keep driving to expand its positions with repair shop owners and managers to make by making work easier with more and more great new products.

Aldo J. Pagliari: Operating expenses were a percentage of net sales of 27.6% compared to 27.8% last year. In the quarter, as noted in our press release, operating expenses included an $11.3 million benefit for payments received associated with a legal matter.

Speaker Change: Well that snap ons first quarter sales flat overcoming significant headwinds critical industries advancing again, the tools group pivoting matching the preference for quick payback products OEM under car repair information market is remaining robust.

Speaker Change: The Opco Oi margin 22, 9% up 90 basis points and an EPS of $4 91.

Aldo J. Pagliari: The 20 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payment, partially offset by increased personnel and other costs, which includes a 20 basis point impact from acquisition. Operating earnings before financial services of $270.9 million in the quarter, including the benefit from the legal payment, compared to $259.8 million in 2023. As a percentage of net sales, operating margin before financial services was 22.9% compared to 22% last year.

Speaker Change: Strong results that overcame the headwinds.

Speaker Change: And benefited from a legal outcome.

Speaker Change: All demonstrating the strength and the strength in the midst of turbulence.

Speaker Change: It was an encouraging quarter.

Speaker Change: Now I'll turn the call over to Aldo Aldo Thanks, Nick our consolidated operating results are summarized on slide six net sales of $1 billion $182 $3 million in the quarter compared to $1 billion $183 million last year.

Aldo J. Pagliari: Electing in eight tenths of 1% organic sales decline, partially offset by $6 7 million of acquisition related sales and $2 5 million of favorable foreign currency translation.

Aldo J. Pagliari: Financial Services revenue of $99.6 million in the first quarter of 2024 compared to $92.6 million last year, while operating earnings of $68.3 million compared to $66.3 million in 2023. Consolidated operating earnings of $339.2 million, which included legal benefit, compared to $326.1 million last year. As a percentage of revenues, the operating earnings margin was 26.5% compared to 25.6% in 2023. Our first quarter effective income tax rate was 22.2% compared to 23.1% last year.

Aldo J. Pagliari: Activity in our automotive repair markets was mixed gains in sales to OEM and independent shop owners and managers were more than offset by lower sales to technicians through our franchise van channel.

Aldo J. Pagliari: Within the industrial sector for our C&I group sales to customers in critical industries were up mid single digits in the quarter as compared to last year.

Aldo J. Pagliari: <unk> to gross margin of 55% improved 70 basis points from 49, 8% last year, primarily reflecting benefits from lower material and other costs and savings from the company's RCI initiatives.

Aldo J. Pagliari: Operating expenses as a percentage of net sales of 27, 6% compared to 27, 8% last year and the quarter as noted in our press release operating expenses included an $11 $3 million benefit for payments received associated with a legal matter.

Aldo J. Pagliari: The 20 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payments, partially offset by increased personnel and other costs, which includes a 20 basis point impact from acquisitions operating earnings before financial services of $279 million in the quarter, including the benefit from the legal payments compared.

Aldo J. Pagliari: Net earnings of $263.5 million, or $4.91 per diluted share, including an $8.8 million, or $0.16 per diluted share, after-tax benefit from the legal payment, compared to $248.7 million, or $4.60 per diluted share, in the first quarter of 2023. Now, let's turn to our segment, Results for the Court, starting with the C&I group on slide 7. Sales of $359.9 million compared to $363.8 million last year, reflecting a 2.5% organic sales decline and a $1.4 million of unfavorable foreign currency translation, partially offset by $6.7 million of acquisition-related sales. The organic decrease is primarily due to a double-digit reduction in the power tools business and a high single-digit decline in the segment's Asia-Pacific operations, mostly associated with lower inter-segment sales

Aldo J. Pagliari: To $259 $8 million in 2023.

Aldo J. Pagliari: As a percentage of net sales operating margin before financial services of 22, 9% compared to 22% last year.

Aldo J. Pagliari: Financial services revenue of $99 $6 million in the first quarter of 2024 compared to $92 $6 million last year, while operating earnings of $68 3 million compared to $66 3 million in 2023.

Consolidated operating earnings of $339 2 million, which included the legal benefit compared to $326 $1 million last year.

Aldo J. Pagliari: As a percentage of revenues the operating earnings margin of 26, 5% compared to 25, 6% in 2023, our first quarter effective income tax rate of 22, 2% compared to 23, 1% last year.

Aldo J. Pagliari: Net earnings of $263 5 million or $4 91 per diluted share, including an $8 $8 million or <unk> 16 per diluted share after tax benefit from the legal payments compared to $248 7 million or $4 60 per.

Aldo J. Pagliari: These declines were partially offset by a mid-single-digit gain in sales to customers in critical industries. With respect to critical industries, military and defense-related sales were robust, as was activity in the aviation sector. Gross margin improved 200 basis points to 40.8% in the first quarter from 38.8% in 2023. This is largely due to increased volumes in the higher gross margin critical industry sector, lower material costs and other cost savings from RCI initiatives, and 50 basis points from the benefit of acquisition.

Aldo J. Pagliari: Per diluted share in the first quarter of 2023.

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

Speaker Change: Sales of $359 9 million compared to $363 $8 million last year, reflecting a two 5% organic sales decline and a $1 4 million of unfavorable foreign currency translation, partially offset by $6 7 million of acquisition related sales <unk>.

Speaker Change: The organic decrease was primarily due to a double digit reduction in the power tools business and a high single digit decline in the segment's Asia Pacific operations, mostly associated with lower intersegment sales.

Aldo J. Pagliari: Operating expenses as a percentage of sales rose 190 basis points to 25.4% in the quarter from 23.5% in 2023, primarily due to the effects of lower sales volumes, investments in personnel and other costs, and a 70 basis point impact from acquisition. Operating earnings for the C&I segment of $55.4 million compared to $55.8 million last year. The operating margin of 15.4% compared to 15.3% in 2023. Turning now to slide eight.

Speaker Change: These declines were partially offset by a mid single digit gain in sales to customers in critical industries.

Speaker Change: With respect to critical industries military and defense related sales were robust as well as activity in the aviation sector.

Gross margin improved 200 basis points to 48% in the first quarter from 38, 8% in 2023.

Speaker Change: This was largely due to increased volumes and the higher gross margin critical industry sector lower material cost and other cost savings from RCI initiatives.

Speaker Change: And 50 basis points from the benefit of acquisitions.

Speaker Change: Operating expenses as a percentage of sales rose 190 basis points to 25, 4% in the quarter from 23, 5% in 2023, primarily due to the effects of lower sales volumes investments in personnel and other cost and a 70 basis point impact from acquisitions.

Aldo J. Pagliari: Sales in the Snap-On Tools group of $500.1 million compared to $537 million a year ago reflect a 7% organic sales decline, partially offset by $600,000 of favorable foreign currency translation. The organic decrease reflects a high single-digit decline in our U.S. business, partially offset by a mid-single-digit gain in our international operations. Gross margin improved 90 basis points to 48.2% in the quarter from 47.3% last year. This improvement primarily reflects decreased sales of lower gross margin products.

Speaker Change: Operating earnings for the C&I segment of $55 $4 million compared to $55 $8 million last year. The operating margin of 15, 4% compared to 15, 3% in 2020, turning now to slide eight.

Speaker Change: Sales in the snap on tools group of $500 1 million compared to $537 million, a year ago, reflecting a 7% organic sales decline, partially offset by $600000 of favorable foreign currency translation.

Speaker Change: The organic decrease reflects a high single digit decline in our U S business, partially offset by a mid single digit gain in our international operations.

Aldo J. Pagliari: Operating expenses as a percentage of sales rose 190 basis points to 24.7% in the quarter from 22.8% in 2023, largely due to the lower sales volume. Operating earnings for the Snap-On Tools Group of $117.3 million compared to $131.7 million last year. The operating margin of 23.5% compared to 24.5% in 2023. Turn to the RS&I group, shown on slide 9.

Speaker Change: Gross margin improved 90 basis points to 48, 2% in the quarter from 47, 3% last year.

Speaker Change: This improvement primarily reflects decreased sales of lower gross margin products.

Speaker Change: Operating expenses as a percentage of sales rose 190 basis points to 24, 7% in the quarter from 22, 8% in 2023, largely due to the lower sales volume.

Speaker Change: Operating earnings for the snap on tools group of $117 3 million compared to $131 $7 million last year.

Speaker Change: The operating margin of 23, 5% compared to 24, 5% in 2023.

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

Aldo J. Pagliari: Sales of $463.8 million compared to $446.6 million in 2023, reflecting a 3.3% organic sales gain and $2.5 million of favorable foreign currency translation. The organic increase includes a high single-digit increase in activity with OEM dealerships and a low single-digit gain in sales of undercar equipment. Gross margin improved 150 basis points to 45% from 43.5% last year, primarily due to benefits from lower material and other costs and savings from RCI initials. Operating expenses as a percentage of sales rose 60 basis points to 20.7% from 20.1% last year, primarily reflecting increased personnel and other costs.

Speaker Change: Sales of $463 8 million compared to 446 $446 $6 million in 2023, reflecting a three 3% organic sales gain and $2 5 million of favorable foreign currency translation.

Speaker Change: The organic increase includes a high single digit increase in activity with OEM dealerships and a low single digit gain in sales of under car equipment.

Speaker Change: Gross margin improved 150 basis points to 45% from 43, 5% last year, primarily due to benefits from lower material and other costs and savings from RCI initiatives operating expenses as a percentage of sales rose 60 basis points to 27% from 21% last year, primarily reflecting increased <unk>.

Aldo J. Pagliari: Operating earnings for the RS&I Group of $112.9 million compared to $104.6 million last year. The operating margin of 24.3% compared to 23.4% reported last year. Now, turning to slide 10.

Speaker Change: Personnel and other costs.

Speaker Change: Operating earnings for the <unk> group of $112 9 million compared.

Speaker Change: Compared to $104 $6 million last year, the operating margin of 24, 3% compared to 23, 4% reported last year.

Aldo J. Pagliari: Revenue from financial services increased $7 million, or 7.6%, to $99.6 million from $92.6 million last year, primarily reflecting growth in the loan portfolio. Financial Services operating earnings were $68.3 million compared to $66.3 million in 2023. Financial Services expenses were up $5 million from 2023 levels, including $4.3 million of higher provisions for credit loss.

Turning to slide 10.

Speaker Change: Revenue from financial services increased $7 million or seven 6% to $99 6 million from $92 $6 million last year, primarily reflecting growth of the loan portfolio.

Speaker Change: Financial services operating earnings of $68 3 million compared to $66 3 million in 2023.

Speaker Change: Financial services expenses were up $5 million from 2023 levels, including $4 $3 million of higher provisions for credit losses.

Aldo J. Pagliari: In the first quarters of both 2024 and 2023, the average yield on finance receivables was 17.7%. In the first quarters of 2024 and 2023, the average yields on contract receivables were 9% and 8.7%, respectively. Total loan originations of $301.7 million in the first quarter represented an increase of $800,000 or 0.3 tenths of 1% from 2023 levels. However, increased originations of contract receivables were mostly offset by a low single-digit decline in extended credit. Moving to slide 11.

Speaker Change: And the first quarters of both 2024 and 2023 the average yield on finance receivables was 17, 7% in the first quarters of 2024 and 2023, the average yield on contract receivables were 9% and eight 7% respectively.

Speaker Change: Total loan originations of $301 $7 million in the first quarter represented an increase of $800000 or three tenths of 1% from 2023 levels increased originations of contract receivables were mostly offset by a low single digit decline in extended credit originations.

Aldo J. Pagliari: Our quarter-end balance sheet includes approximately $2.5 billion of gross financing receivables, with $2.2 billion from our U.S. operation. For extended credit or finance receivables, the U.S. 60-day plus delinquency rate of 1.8% is up 30 basis points from the first quarter of 2023 but unchanged from the rate reported last quarter. Trailing 12-month net losses for the overall extended credit portfolio of $54.1 million, representing 2.75% of outstandings at quarter end, which is up 16 basis points from the end of last quarter. Considering the current environment and despite these slight upward trends, we believe that delinquency and portfolio performance metrics remain relatively stable. Now turning to slide 12.

Going to slide 11.

Speaker Change: Our quarter end balance sheet includes approximately $2 5 billion of gross financing receivables with $2 2 billion from our U S operation for extended credit or finance receivables. The U S 60 day, plus delinquency rate of one 8% is up 30 basis points from the first quarter of 2023, but unchanged from the rate reported last quarter.

Speaker Change: Trailing 12 month net losses for the overall extended credit portfolio of $54 1 million representing.

Speaker Change: Representing 275% of Outstandings at quarter end.

Speaker Change: Is up 16 basis points from the end of last quarter.

Speaker Change: Considering the current environment and despite the slight upward trends, we believe the delinquency and portfolio performance metrics remained relatively stable now.

Speaker Change: Now turning to slide 12.

Aldo J. Pagliari: Cash provided by operating activities of $348.7M in the quarter represented 129% of net earnings and compared to $301.6M last year. The improvement, as compared to the first quarter of 2023, largely reflects lower year-over-year increases in working investment, which included a reduction in inventory during the quarter, as well as higher net earnings. Net cash used by investing activities of $63.2 million primarily reflected net additions to finance receivables of $40.2 million and capital expenditures of $21.8 million.

Speaker Change: Cash provided by operating activities of $348 $7 million in the quarter represented 129% of net earnings and compared to $301 $6 million last year.

Speaker Change: The improvement as compared to the first quarter of 2023, largely reflects lower year over year increases in working investment, which included a reduction in inventory during the quarter as well as higher net earnings.

Speaker Change: Net cash used by investing activities of $63 $2 million primarily.

Speaker Change: Reflected net additions to finance receivables of $40 2 million and capital expenditures of $41 8 million.

Aldo J. Pagliari: Net cash used by financing activities of $164.2 million, including cash dividends of $98.2 million, and the repurchase of 248,000 shares of common stock for $70.2 million under our existing share repurchase program. As of quarter end, we have remaining availability to repurchase up to an additional $290.6 million of common stock under our existing authorization, see slide 13. Trade and other accounts receivable increased $36.2 million from 2023 year-end, with day sales outstanding of 63 days compared to 60 days as of year-end and to 62 days as of the end of the first quarter of 2023. Inventories decreased $35.4 million from 2023 year-end.

Speaker Change: Net cash used by financing activities of $164 2 million included cash dividends of $98 2 million and the repurchase of 248000 shares of common stock for $72 million under our existing share repurchase programs as of quarter end, we had remaining availability to repurchase up to an <unk>.

Speaker Change: Additional $290 6 million of common stock under our existing authorizations.

Speaker Change: Turning to slide 13 trade and other accounts receivable increased $36 $2 million from 2023 year end days sales outstanding of 63 days compared to 60 days as of year end to 62 days as of the end of the first quarter of 2023 inventories.

Speaker Change: Inventories decreased $35 $4 million from 2023 year end.

Aldo J. Pagliari: Trailing 12-month basis, inventory turns of 2.4 compared to 2.3 at year-end 2023. Our quarter-end cash position of $1,121,000,000 compared to $1,001,500,000 at year-end 2023. Our net debt-to-capital ratio of 1.5% compared to 3.8% at year-end 2023. In addition to cash and expected cash flow from operations, we have more than $900 million available under our credit facilities. As of quarter end, there were no amounts outstanding under the credit facility, and there were no commercial paper borrowings outstanding.

Speaker Change: Trailing 12 month basis inventory turns of two four compared to $2 three at year end 2023 or.

Speaker Change: Our quarter end cash position of $1 billion $121 million compared to $1 billion $1 $5 billion at year end 2023, our net debt to capital ratio of one 5% compared to three 8% at year end 2023.

Speaker Change: In addition to cash and expected cash flow from operations, we have more than $900 million available under our credit facilities as of quarter end. There were no amounts outstanding under the credit facility and there were no commercial paper borrowings outstanding.

Aldo J. Pagliari: That concludes my remarks on our first quarter performance. I'll now briefly review a few Outlook items for 2024. With respect to corporate expenses, in the second quarter, we believe we could benefit from a legal payment similar to that received in the first quarter. For the full year, we expect that capital expenditures will be in a range of $100 to $110 million, and we currently anticipate that our full year 2024 effective income tax rate will be in the range of 22% to 23%.

That concludes my remarks on our first quarter performance.

Speaker Change: I'll now briefly review a few outlook items for 2024 with respect to corporate expenses in the second quarter. We believe we could benefit from a legal payments similar to that received in the first quarter.

Speaker Change: For the full year, we expect that capital expenditures will be in a range of $100 million to $110 million and we currently anticipate that our full year 2024 effective income tax rate will be in the range of 42% to 23% I'll now turn the call back to Nick for his closing thoughts Nick.

Nicholas T. Pinchuk: I'm now turning the call back to Nick for his closing thoughts. Thanks, Ella. Wow. That's the first quarter. Strength, in the midst of college. Even with a part of the enterprise below standard. You see, Snap-On is a business that reaches varied customers in different industries and in various geographies, united in a coherence that is a criticality of work. The essential nature of what we do, and we have opportunity and advantage in virtually all of those areas.

Nicholas T. Pinchuk: Thanks Alan.

Nicholas T. Pinchuk: Well, that's the first quarter.

Nicholas T. Pinchuk: Strength.

Nicholas T. Pinchuk: In the midst of collar.

Nicholas T. Pinchuk: Even with a part of the enterprise below standards.

Nicholas T. Pinchuk: You see snap on as a business that reaches very customers in different industries and in various geographies United in the coherence that is the criticality of work the essential nature of what we do.

Nicholas T. Pinchuk: And we have the opportunity and advantage in virtual we have opportunity and advantage in virtually all of those arena and as a consequence, even when the largest of our entity entities is not standard we find a way in other areas to maintain overall strength is that coherent strategic breadth and the experience and capability of our <unk>.

Nicholas T. Pinchuk: And as a consequence, even when the largest of our entities is not at standard, we find a way in other areas to maintain overall strength. It's that coherent strategic breadth and the experience and capability of our team to execute that has made Snap-On so resilient, moving consistently upward for all these years. And this quarter was another demonstration of that resilience. CNI, dealing with economic challenges across geographies, extending to critical industries, proving that Snap-On can roll out of the garage, exploiting considerable opportunities, and do it profitably.

Nicholas T. Pinchuk: Team to execute that is made snap ons, so resilient moving consistently upward for all these years and this quarter was another demonstration of that resilience.

Nicholas T. Pinchuk: C&I.

Nicholas T. Pinchuk: Engaging economic challenges across geographies extending to critical industries proving that snap on can roll out of the garage exploiting the considerable opportunity and do it profitably.