Q2 2024 Snap-on Inc Earnings Call

July 18, 2024

Good day and welcome to the Snap-On Incorporated 2024 Second Quarter Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Second Quarter Results Conference Call. All participants will be in a listen-only mode.

Operator: The second quarter results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-town phone. To withdraw your question, please press star, then two. Please note that this event is being recorded.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone.

Sara M. Verbsky: After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

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

Sara Verbsky: I would now like to turn the conference over to Sara Verbsky, Vice President, and Rest of Relations.

Sara Verbsky: Thank you, Cole.

Sara M. Verbsky: Thank you, Cole, and good morning, everyone. We appreciate you joining us today as we review Snap-On's second quarter results, which are detailed in our press release issued earlier this morning. We have on the call Nick Pinchuk, Snap-On's Chief Executive Officer, and Aldo Pagliari, Snap-On's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance.

Sara Verbsky: Good morning, everyone. We appreciate you joining us today as we review Snap-on second quarter results, which are detailed in our press release issued earlier this morning. We have on the call, Nick Pinchuk, Snap-on's Chief Executive Officer, and Aldo Pagliari, Snap-on's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance, although we'll then provide a more detailed review of our financial results.

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 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: Nick will kick off our call this morning with his perspective on our performance. Aldo will then provide a more detailed review of our financial results. After Nick provides some closing thoughts, we'll take your questions.

Sara Verbsky: After Nick provides some closing thoughts, we'll take your questions. As usual, we provide a slide 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. These slides will be archived on our website along with a transcript of today's call.

Speaker Change: As usual, we provided slides to supplement our discussion. These slides can be accessed under the Downloads tab in the Webcast Viewer, as well as on our website, snap-on.com, under the Investor section. These slides will be archived on our website, along with a transcript of today's call.

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 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.

Sara Verbsky: Any statements made during this call relative to management expectations, estimates, or beliefs, or that otherwise discussed management or the company's outlook, plans, or projections are forward-looking statements, and actual results may differ. They 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: Any statements made during this call relative to management 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.

Speaker Change: 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.

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 Tinchuk.

Sara 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.

Speaker Change: 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.

Nicholas T. Pinchuk: 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?

Sara Verbsky: With that said, I'd now like to turn the call over to Nick Pinchak.

Nicholas Pinchuk: Thanks, Sarah.

Nicholas T. Pinchuk: Thanks, Sara. Good morning, everyone. As usual, I'll start with the highlights of our second quarter, and I'll provide my perspectives on the results in our markets and on our path ahead. After that, Aldo will give you a detailed review of the financials for the second quarter. Of course, there were challenges, uncertainty remained prominent among our technician customers, but our Repair Systems and Information, or RS&I Group, with Repair Shop Owners and Managers, and our Commercial and Industrial, or C&I Group, enabling critical tasks outside the vehicle shop, they both progressed very nicely, taking full advantage of their opportunities and balancing the tech turbulence in tools.

Nicholas Pinchuk: Morning, everybody. As usual, I'll start with the highlights of our second quarter, and I'll provide my perspectives on the results, on our markets, and on our path ahead. After that, Aldo will give you a detailed review of the financials. Our second quarter. Of course, the word challenges are certainly the main prominent among our technician customers, but our repair system is an information, or ours and I Group, with repair shop owners and managers, and our commercial and industrial or CNI Group, enabling critical tasks outside the vehicle shop. They both progressed very nicely, taking full advantage of their opportunities and balancing the tech turbulence in tools.

Nick: Thanks, Sara. Good morning, everybody.

Nick: As usual, I'll start with the highlights of our second quarter, and I'll provide my perspectives on the results, on our markets, and on our path ahead. After that, Aldo will give you a detailed review of the financials.

Nick: A second quarter.

Aldo: Of course, there were challenges. Uncertainty remained prominent among our technician customers, but...

Aldo: Our Repair Systems and Information, or RS&I Group.

Speaker Change: with Repair Shop Owners and Managers, and our Commercial and Industrial, or C&I Group, enabling critical tasks outside the vehicle shop. They both progressed very nicely, taking full advantage of their opportunities and balancing the tech turbulence in tools.

Nicholas Pinchuk: So our results in the second quarter are clear and unmistakable demonstration that snaps on principal value creating mechanism, observing work right in the workplace, using the insights, learn to create products that make critical, critical tasks easier and more efficient. That works across many industries, and in many environments. It highlights that our enterprises are not dependent on a particular customer base. We believe it shows that as we move forward reaching higher, we do so with greater resilience and with expanding possibilities, and with an enterprise that's broader and stronger than ever before. Like most quarters, we did have headwinds.

Nicholas T. Pinchuk: So our results in the second quarter are a clear and unmistakable demonstration that Snap-On's principal value-creating mechanism, observing work right in the workplace, using the insights learned to create products that make critical tasks easier and more efficient, works across many industries and in many environments. It highlights that our enterprise is not dependent on a particular customer base. We believe it shows that as we move forward, reaching higher, we do so with greater resilience and with expanding possibilities and with an enterprise that's broader and stronger than ever before. Like most quarters, we did have headwinds. We had opportunities with disparities from group to group and geography to geography.

Aldo: So our results in the second quarter are a clear and unmistakable demonstration that Snap-On's principle value creating mechanism

Aldo: Observing work right in the workplace, using the insights learned to create products that make critical tasks easier and more efficient. That works across many industries and in many environments. It highlights that our enterprise is not dependent on a particular customer base.

Aldo: We believe, it shows that as we move forward, reaching higher, we do so with greater resilience and with expanding possibilities and with an enterprise that's broader and stronger than ever before.

Nicholas Pinchuk: We had opportunities with disparities from group to group in geography to geography. North America remained mixed, with significant gains in critical industries. International, internationally, our consolidated results were varied but reflected overall positive. Europe showed some signs of recovery among the scattered economic disruptions from region to region, and the Asia-Pacific markets, the registered progress, overcoming the delayed recovery in China.

Aldo: Like most quarters, we did have headwinds. We had opportunities with disparities from group to group and geography to geography.

Nicholas T. Pinchuk: North America remained mixed, with significant gains in critical industries. Internationally, our consolidated results were varied, but they reflected overall positives. Europe showed some signs of recovery among the scattered economic disruptions from region to region, and the Asia-Pacific markets registered progress overcoming the delayed recovery in China.

Aldo: North America remained mixed, with significant gains in critical industries. Internationally, our consolidated results were varied, but reflected overall positives. Europe showed some signs of recovery among the scattered economic disruptions from region to region, and the Asia-Pacific market...

Aldo: registered progress overcoming the delayed recovery in China.

Nicholas T. Pinchuk: So now let's talk about the results. Second quarter sales of $1,179,400,000 were slightly down from the $1,191,300,000 of last year. On an organic basis, excluding $5.7 million in unfavorable foreign currency and $7.3 million from acquisitions, our sales were lower by 1.1%.

Nicholas Pinchuk: So now let's talk about the results. Second quarter sales of 1 billion, 179.4 million were slightly down from the 1 billion, 191.3 million of last year. On an organic basis, excluding 5.7 million and unfavorable foreign currency, and 7.3 million from acquisitions, our sales were lower by 1.1%. The op-go operating income or O.I. Margin for the full quarter was 23.8%, up 50 basis points. Now, with that said, that level included the benefit of a final payment from our recent legal win. If including that addition, the O.I. margin was 22.8% down from 2023, but still among are very best to pass only by the record settings in the second quarter of last year.

Aldo: So now let's talk about the results. Second quarter sales of $1,179,400,000 were slightly down from the $1,191,300,000 of last year. On an organic basis, excluding $5.7 million in unfavorable foreign currency and $7.3 million from acquisitions.

Nicholas T. Pinchuk: The opco operating income or OI margin for the full quarter was 23.8%, up 50 basis points. Now, with that said, that level included the benefit of a final payment from our recent legal win. Excluding that addition, the OI margin was 22.8% down from 2023, but still among our very best, surpassed only by the record-setting second quarter of last year. For financial services, the OI grew to 70.2 million from the 66.9 million recorded in 2023.

Aldo: Our sales were lower by 1.1%.

Aldo: The opco operating income or OI margin for the full quarter was 23.8%, up 50 basis points.

Aldo: Now with that said...

Aldo: That level included the benefit of a final payment from our recent legal win.

Aldo: Excluding that addition, the OI margin was 22.8% down from 2023, but still among our very best, surpassed only by the record-setting second quarter of last year.

Nicholas Pinchuk: For financial services, the O.I. grew to 70.2 million from the 66.9 million recorded in 2023. A number that wouldn't combine with our op-go results raised the consolidated O.I. margin to 27.4%, up 60 basis points over the 26.8 of 2023. An EPS, it was $5.07, which included a benefit from the legal payment of 16 cents. Again, excluding that legal item, EPS was $4.91, still above last year and representing a new Snap-on level for any quarter. Strength and progress against the wind.

Nicholas T. Pinchuk: A number that, when combined with our OPCO results, raised the consolidated OI margin to 27.4%, up 60 basis points over the 26.8 of 2023. And EPS was $5.07, which included a benefit from the legal payment of $0.16. Again, excluding that legal item, EPS was $4.91, still above last year, and representing a new Snap-On level for any quarter, showing strength and progress against the wind. So those are the overall numbers. Now, for a view of the markets, the second quarter once again highlighted that the opportunities in automotive repair continue to be favorable, marked by the ever-expanding complexity of design, new and diverse powertrains, more interlocking systems to advance driving autonomy, arrays of drive-by-wire sensors, new body materials, and an aging car park now averaging 12.6 years.

Aldo: For financial services, the OI grew to $70.2 million from the $66.9 million recorded in 2023. A number that when combined with our OPCO results...

Aldo: Raised the consolidated OI margin to 27.4% up 60 basis points over the 26.8 of 2023 and EPS

Aldo: It was $5.07, which included a benefit from the legal payment of $0.16. Again, excluding that legal item, EPS was $4.91, still above last year.

Aldo: and representing a new Snap-On level for any quarter.

Aldo: Strength and Progress Against the Wind

Nicholas Pinchuk: So those are the overall numbers. Now for a view of the market. The second quarter, once again, highlighted that the opportunities in automotive repair continue to be favorable, marked by the ever-expanding complexity of design, new and diverse powertrains, more interlocking systems to advance driving autonomy, a raise of drive-by-wire sensors, new body materials, and an aging car park now averaging 12.6 years. The opportunity in vehicle repair exists industry-wide, and they appear to be unwavering. The vehicle OEMs, the dealerships, and the independent shops recognize the positive trend, and they continue to invest in tools and equipment that will expand their capabilities to support the influx of new models and the ever-rising complexity of repair.

Aldo: So those are the overall numbers.

Aldo: Now for a view of the markets.

Aldo: The second quarter, once again, highlighted that the opportunities in automotive repair, they continue to be favorable, marked by the ever-expanding complexity of design. New and diverse...

Aldo: Power trains, more interlocking systems to advance driving autonomy, arrays of drive-by-wire sensors, new body materials, and an aging car park now averaging 12.6 years. The opportunity in vehicle repair exists industry-wide, and they appear to be unwavering.

Nicholas T. Pinchuk: The opportunity in vehicle repair exists industry-wide, and the industry appears to be unwavering. The vehicle OEMs, the dealerships, and the independent shops recognize the positive trend, and they continue to invest in tools and equipment that will expand their capabilities to support the influx of new models and the ever-rising complexity of repair. And in the quarter, our RS&I group expanded our reach into OEM dealership programs and strengthened our position in independent garages with our repair management software packages and with great new hardware products. So the possibilities with repair shop owners and managers are strong. The outlook looking forward is quite positive, and Snap-On is well-positioned to seize the opportunity. Now, let's shift to the technician.

Aldo: The Vehicle OEMs.

Aldo: The dealerships.

Aldo: and the Independent Shops recognizes.

Aldo: The positive trend, and they continue to invest in tools and equipment that will expand their capabilities to support the influx of new models and the ever-rising complexity of repair.

Nicholas Pinchuk: And in the quarter, our design group expanded our reach into OEM dealership programs and strengthened our position in independent grants, with our repair management software packages, and with great new hardware products. So the possibility with repair shop owners and managers is strong. The outlook looking forward is quite positive, and Snap on its well-position to seize the opportunity.

Speaker Change: And in the quarter, our RS&I group expanded our reach into OEM dealership programs and strengthened our position in independent corrections with our repair management software packages and with great new hardware products.

Speaker Change: So, the possibility...

Speaker Change: Repair shop owners and managers are strong, the outlook looking forward is quite positive and Snap-On is well positioned to seize the opportunities.

Nicholas Pinchuk: Now, let's shift to the technicians. These are folks who turn the wrenches to make the diagnoses and execute the repair. Again, this quarter, I had multiplications to meet with the franchisees, the garage owners, and the techs, and it reconfirmed that the shops and the technicians are prospering. The microdata says it's true. Repair hours are up. Tech wages are healthy. The demand for techs are strong and the number of techs are increasing. The number of techs is increasing. It makes sense. New systems, the rising complexity, the aging car park, makes what the techs do more difficult and more valuable.

Nicholas T. Pinchuk: These are the folks who turn the wrenches, make the diagnoses, and execute the repairs. Again, this quarter, I had multiple opportunities to meet with the franchisees, the garage owners, and the techs, and it reconfirmed that the shops and the technicians are prospering. The microdata says it's true. Repair hours are up. Tech wages are healthy. The demand for techs is strong, and the number of techs is increasing. The number of techs is increasing.

Speaker Change: Now let's shift to the technicians.

Speaker Change: These are the folks who turn the wrenches, make the diagnoses, and execute the repairs. Again, this quarter, I had multiple occasions to meet with the franchisees, the garage owners, and the techs, and it reconfirmed that the shops and the technicians are prospering. The microdata says it's true. Repair hours are up.

Speaker Change: Tech wages are healthy, the demand for techs is strong, and the number of techs is increasing. The number of techs is increasing. It makes sense. New systems, the rising complexity, the aging car park, makes what the techs do more difficult and more valuable.

Nicholas T. Pinchuk: It makes sense. New systems, the rising complexity, the aging car parts make what the techs do more difficult and more valuable. So the economic trajectory of vehicle repair is quite positive. It's an attractive place to be.

Nicholas Pinchuk: So the economic trajectory of vehicle repair is quite positive. It's an attractive place to be. But it's also clear that while the techs are busy and have cash, their confidence in the way forward is still poor. Every day, there's bad news. Two wars with no end in sight. The border unsettled. The shipping lanes disrupted. Tint for tech with China, lingering inflation, and the election. The election seems to get more unpredictable with every morning news cycle. The hits just keep on coming for Bad News for Breakfast. It's almost like the grassroots technicians have a fear of what may happen.

Speaker Change: So the economic trajectory of vehicle repair is quite positive.

Nicholas T. Pinchuk: But it's also clear that while the techs are busy, and Half Cash, their confidence in the way forward is still poor. Every day, there's a bad war, Two wars with no end in sight.

Speaker Change: It's an attractive place to be.

Speaker Change: But it's also clear that while the techs are busy,

Speaker Change: And have cash. Their confidence in the way forward is still poor. Every day there's bad news.

Nicholas T. Pinchuk: The Border Unsettled, The Shipping Lanes Disrupted, Tint for Tat with China, Lingering Inflation, and The Election seem to get more unpredictable with every morning news cycle. The hits just keep on coming for bad news for breakfast. It's almost like the grassroots technicians have a fear of what may happen. And, paraphrasing the movie Dune, fear is the outlook killer. The franchisees also confirmed to us that with the general uncertainty, techs are leaning toward purchases that provide quick payback while making the work easier right away.

Speaker Change: Two wars with no end in sight. The border unsettled, the shipping lanes disrupted, tit-for-tat with China, lingering inflation, and the election. The election!

Speaker Change: Seems to get more unpredictable with every morning news cycle. The hits just keep on coming for bad news for breakfast. It's almost like the grassroots technicians have a fear of what may happen. And paraphrasing the movie Dune, fear is the outlook killer.

Nicholas Pinchuk: And paraphrasing the movie Dune, fear is the outlook killer. The franchise is also confirmed to us that, with the general uncertainty, the techs are leaning toward purchases that provide quick paybacks while making the work easier right away. They're kind of cool on longer term, bigger ticket items. And knowing that, the tools will continue to focus on near-term product development, manufacturing changes, and selling efforts that match those preferences.

Speaker Change: The franchisee is also confirmed to us.

Speaker Change: That with the general uncertainty, the techs are leaning toward purchases that provide quick paybacks, while making the work easier right away. They're kind of cool on longer-term, bigger-ticket items. And knowing that, the tools group continues to focus on near-term product development, manufacturing changes, and selling efforts that match those preferences.

Nicholas T. Pinchuk: They're kind of cool with longer-term, bigger-ticket items. And knowing that, the tools group continues to focus on near-term product development, manufacturing changes, and selling efforts that match those preferences. So now let's talk about critical industries, where Snap-On rolls out of the garage solving tasks of significant consequence. This is where the CNI group operates, and it's our most significant international presence, the area where we're most subject to global headwinds. But the news was still reasonably encouraging.

Nicholas Pinchuk: So now let's talk about critical industries. We're snap on rules out of the garage, solving tasks of significant consequence. This is where the CNI group operates. And that's our most significant international presence. The area where we're most subject to global headwinds, but the news was still reasonably encouraging. For the sectors, the critical industries kept rising in the period; the military, aviation, and education segments led the way. For geographies, Europe was mixed; several countries in recession, and the ongoing impacts of the Ukraine war. Asia-Pacific also remained mixed. China was weak, driven by its delayed financial recovery, and Southeast Asia again had its difficulties.

Speaker Change: So now let's talk about critical industries, where Snap-On rolls out of the garage, solving tasks of significant consequence.

Speaker Change: This is where the CNI group operates, and it's our most significant international presence, the area where we're most subject to global headwinds.

Nicholas T. Pinchuk: For sectors, critical industries kept rising in the period. The military, aviation, and education segments led the way. For geographies, Europe was mixed, with several countries in recession and the ongoing impacts of the Ukrainian war. Asia-Pacific will also remain mixed.

Speaker Change: The news was still reasonably encouraging. For the sectors, the critical industries kept rising in the period. The military, aviation, and education segments led the way.

Speaker Change: For geographies, Europe was mixed, several countries in recession, and the ongoing impacts of the Ukraine war. Asia-Pacific will also remain mixed. China was weak, driven by its delayed financial recovery, and Southeast Asia, again, had its difficulties.

Nicholas Pinchuk: But both regions for CNI and for the corporation in total were positive in the quarter, despite the variations.

Nicholas T. Pinchuk: Both regions, for C&I and for the corporation in total, were positive in the quarter, despite the variations. Now speaking more about the critical industry, the demand for customized solutions to drive reliability and productivity keeps rising, and CNI continues to show significant and broader advances in that arena. And we believe there are more coming. So that's the market, vehicle techs, cash rich but confidence poor, preferring quick payback products, repair shop owners, and managers moving upward to match the car park and the critical industries booming outside the garage. In C&I, so let's cover the groups now.

Speaker Change: Both regions, for C&I and for the corporation in total, were positive in the quarter, despite the variations.

Nicholas Pinchuk: Now, speaking more than now, I'd like to speak more about the critical industries. The demand for customized solutions are driving reliability and productivity, keeps rising, and CNI continues to show significant and broad advances in Adirina, and we believe there's more common. So that's the market, vehicle techs, cash rich, but the confidence poor, preferring quick payback products, repair shop owners and managers moving upward to match the car park, and the critical industries booming outside the garage.

Speaker Change: Now I'd like to speak more about the critical industries. The demand for customized solutions to drive reliability and productivity keeps rising and CNI continues to show significant and broad advances in that arena and we believe there's more coming.

Speaker Change: So that's the markets, vehicle techs, cash rich but confidence poor, preferring quick payback products, repair shop owners and managers moving upward to match the car park, and the critical industries booming outside the garage.

Nicholas Pinchuk: And CNI, so let's cover the groups now. And CNI sales were 372 million, representing an organic sales gain of 1.2% excluding 7.3 million of acquisition-related sales and 3.8 million of an unfavorable foreign currency. Higher activity with customers based in all those critical industries, and the gains in Asia, and again in Asia, that defies the turbulence, more than offset the clients in our power tool and European based hand tool operations. From an earnings perspective, CNI, OI, 62.2 million, improved 4.1 million, or 7.1 percent above last year. And the OI, more. It was 16.7 percent, up 70 basis points, representing a new record for that group; gangbusters, gangbusters for those guys.

Nicholas T. Pinchuk: In C&I, sales were 372 million, representing an organic sales gain of 1.2% excluding 7.3 million of acquisition-related sales and 3.8 million in unfavorable foreign currency. Higher activity with customers based in those critical industries and a gain in Asia that defies the turbulence more than offset declines in our power tool and European-based hand tool operations. From an earnings perspective, C&I OI of 62.2 million improved 4.1 million, or 7.1% above last year, and the OI margin was 16.7%, up 70 basis points, representing a new record for that group.

Speaker Change: and C&I. So let's cover the groups now.

Speaker Change: In C&I, sales were $372 million, representing an organic sales gain of 1.2 percent, excluding $7.3 million of acquisition-related sales and $3.8 million in unfavorable foreign currency.

Speaker Change: Higher activity with customers based in those critical industries, and a gain in Asia that defies the turbulence, more than offset declines in our power tool and European-based hand tool operations.

Speaker Change: From an earnings perspective, C&I OI of $62.2 million improved $4.1 million, or 7.1% above last year. And the OI margin?

Speaker Change: It was 16.7 percent.

Speaker Change: up 70 basis points, representing a new record for that group. Gangbusters!

Nicholas T. Pinchuk: And the big driver was our international division, continuing its upward trajectory with a double-digit rise and very high profitability. You know, about 18 months ago, we expanded our capability to make work easier outside the garage by adding another building for industrial custom kitting, serving a range of critical segments. And it's paid off. PAYDO UP! PAYDO UP! PAYDO UP!

Nicholas Pinchuk: And the big driver was our international division, continuing its upward trajectory with a double-digit rise and very strong profitability. You know, about 18 months ago, we expanded our capability to make more easier outside the garage by adding another building for the industrial, for industrial custom-kitting, serving a range of critical segments. And it's paid off, paid off, big. Since then, that business is behind a tear, baffle, cranking out more and more of the spoke product bundles, sophisticated solutions like our automated tool control units, that have become the standard for a range of industries, custom kit offerings aimed at specific applications and at making the critical work easier and more reliable.

Speaker Change: Gangbusters for those guys.

Speaker Change: And the big driver was our international division, continuing its upward trajectory with a double-digit rise and vary.

Speaker Change: Strong profitability.

Speaker Change: You know, about 18 months ago, we expanded our capability to make work easier outside the garage by adding another building for industrial custom kitting, serving a range of critical segments. And it's paid off. It's paid off big.

Nicholas T. Pinchuk: Since then, that business has been on a tear, baffled, cranking out more and more bespoke product bundles, sophisticated solutions like our automated tool control units that have become the standard for a range of industries, custom kit offerings aimed at specific applications and at making critical work easier and more reliable. It's driven some nice gains all around the world, and we believe we see many more possibilities in that arena. So we continue to invest in critical industries, expanding capabilities, like in our custom tool machine shop in Kenosha, producing low volume, high reward items for the most essential tasks.

Speaker Change: Transcript by Rev.com Page of

Speaker Change: That business has been on a tear. Blah-blah.

Speaker Change: Cranking out more and more bespoke product bundles, sophisticated solutions like our automated tool control units that have become the standard for a range of industries. Custom kit offerings aimed at specific applications and at making the critical work easier and more reliable. It's driven some nice gains all around the world. And we believe...

Nicholas Pinchuk: It's driven some nice gains all around the world. And we believe we see many more possibilities in that arena. So we continue to invest in critical industries, expanded capabilities like our custom tool machine shop in Kenosha, producing low volume, high reward items for the most essential tasks. For example, visiting an oil drilling site, we saw that adding a section of pipe on the rigs requires technicians to move around the circumference, constantly repositioning the turning tool. It's a slow and clumsy and imprecise effort. Our custom team tackled the problem, designing both a new spoke wrench, both a new bespoke wrench, both designing a new bespoke wrench specifically for the task, and enabled by our new Kenosha machine shop to configure the special machining process to produce it.

Speaker Change: We see many more possibilities in that arena.

Speaker Change: So we continue to invest in critical industries, expanding capabilities, like in our custom tool machine shop in Kenosha, producing low volume, high reward items for the most essential tasks. For example, visiting an oil drilling site, we saw that adding a section of pipe on the rigs requires technicians to move around the circumference.

Nicholas T. Pinchuk: For example, visiting an oil drilling site, we saw that adding a section of pipe on the rigs requires technicians to move around the circumference, constantly repositioning the turning tool. It's a slow, clumsy, and imprecise effort. Our custom team tackled the problem, designing both a new bespoke wrench specifically for the task, and enabled by our new Kenosha machine shop, configured a special machining process to produce it. And it all works.

Speaker Change: Constantly repositioning the turning tool. It's a slow and clumsy and imprecise effort.

Speaker Change: Our custom team tackled the problem, designing both a new bespoke wrench, both designing a new bespoke wrench specifically for the task, and enabled by our new Kenosha machine shop, configured a special machining process to produce it.

Nicholas Pinchuk: And in all words, the special oil rig pipe wrench greatly reduced the rework associated with misalignments. And substantially decreased the task time, getting the job done more efficiently and more reliably, and along the way expanding the Snap-on reputation in the critical oil and gas sector. Also in the quarter, we introduced a new line of 14.4 volts micro power drills aimed specifically at diverse applications in aviation and general manufacturing. Tastinose sectors vary from inserting wood screws to drilling accurate holes and airframes to high volumes on production lines. The span of a variety, each tool in the new line, and as a range of them, is set to a different RPM range, enabling the tech to fit the speed to the job, substantially reducing the rework or irreversible damages.

Nicholas T. Pinchuk: The Special Oil Rig Pipe Wrench greatly reduced the rework associated with misalignments and substantially decreased the task time, getting the job done more efficiently and more reliably, and along the way, expanding the snap-on reputation in the critical oil and gas sector. Also in the quarter, we introduced a new line of 14.4 volts micropower drills aimed specifically at diverse applications in aviation and general manufacturing.

Speaker Change: And it all worked.

Speaker Change: The special oil rig pipe wrench greatly reduced the rework associated with misalignments and substantially decreased the task time, getting the job done more efficiently and more reliably, and along the way, expanding the Snap-On reputation in the critical oil and gas sector.

Speaker Change: Also in the quarter.

Speaker Change: We introduced a new line of 14.4 volts micro-powered drills aimed specifically at diverse applications in aviation and general manufacturing.

Nicholas T. Pinchuk: Past and now sectors vary from inserting wood screws to drilling accurate holes in airframes to high volumes on production lines. To span the variety, each tool in the new line, and there's a range of them, is set to a different RPM range, enabling the tech to fit the speed to the job, substantially reducing rework or irreversible damages. It's also designed for two operating stages. The first, slower.

Speaker Change: Tasks in those sectors vary from inserting wood screws to drilling accurate holes in airframes to high volumes on production lines. To span the variety, each tool in the new line, and there's a range of them, is set to a different RPM range, enabling the tech to fit the speed to the job.

Speaker Change: Substantially reducing rework or irreversible damages. Damage.

Nicholas Pinchuk: The drill is also designed for two operating stages: the first, slower, allowing the tools to bite into the materials, securing a position for the serious drilling; and the second stage performing that serious drilling at the pre-determined RPM, making it quick and clear cut. Our new industrial microgills, two stage design, matched to the task, bringing new levels with accuracy, consistency, and reliability to the work. It's a superior tool for the very task of those sectors, and the customers have noticed.

Speaker Change: It's also designed for two operating states, the first, slower.

Nicholas T. Pinchuk: Allowing the tools to bite into the materials, securing a position for the serious drilling. And the second stage, performing that serious drilling at the predetermined RPM, making a quick and clear cut. Our new industrial micro drills, with their two-stage design, are up to the task, bringing new levels of accuracy, consistency, and reliability to the work.

Speaker Change: Allowing the tools to bite into the materials, securing a position for the serious drilling. And the second stage, performing that serious drilling at the predetermined RPM, making a quick and clear cut. Our new industrial micro drills, two-stage design, match to the task, bringing new levels of accuracy, consistency, and reliability to the work. It's a superior tool for the varied tasks of those sectors.

Nicholas T. Pinchuk: It's a superior tool for the varied tasks of those sectors, and the customers have noticed. See an eye in the quarter, launching customized solutions, maintaining its strong momentum in the critical industry, extending out of the garage, and reaching new heights in profitability. Now for the tools, Sales in the second quarter of $482 million included an organic decrease of 7.7%. The group's OI margin in the period was 23.8%, down 250 basis points due to the lower volume. But gross margins, hell, down 20 basis points. Almost flat.

Nicholas Pinchuk: C and I in the quarter, launching customized solutions, maintaining its strong momentum in the critical industry, extending out of the garage and reaching new heights in profitability.

Speaker Change: and the customers have noticed.

Speaker Change: See an eye in the quarter, launching customized solutions, maintaining its strong momentum in the critical industries, extending out of the garage and reaching new heights in profitability. Now for the tools group.

Nicholas Pinchuk: Now for the tools group. Sales in a second quarter of $4.82 million, including an organic decrease of 7.7%. The group's OI margin of period was 23.8%, down 250 basis points due to lower bonds. But gross margins held down 20 basis points, almost flat. The benefits of new product, manufacturing efficiencies, and rapid continuous improvement; our RCI is written all over those numbers. And during the quarter, we continue to focus our product development, redirect our plans, and guide our selling programs toward innovative, quick payback solutions that drive productivity. A quarterstone for the pivot is rooted in customer in our customer connection, standing side by side with the technicians, observing the work, witnessing the difficulties of modern and complex repair, and using the inside game to create a tool that makes especially difficult tasks much easier.

Speaker Change: Sales in the second quarter of $482 million included an organic decrease of 7.7%. The group's OI margin in the period was 23.8%, down 250 basis points due to the lower volumes.

Speaker Change: But gross margins, hell.

Speaker Change: Down 20 basis points.

Nicholas T. Pinchuk: The Benefits of New Products, Manufacturing Efficiencies, and Rapid Continuous Improvement, or RCI, are written all over those pages. And during the quarter, we continue to focus our product development, redirect our plans, and guide our selling programs for innovative, quick payback solutions that drive productivity. A cornerstone for the pivot is rooted in the customer, in our customer connection, standing side by side with the technicians, observing the work, witnessing the difficulties of modern and complex repair, and using the insights gained to create a tool that makes especially difficult tasks much easier.

Speaker Change: Almost flat.

Speaker Change: The benefits of new product, manufacturing efficiencies, and rapid continuous improvement or RCI is written all over those numbers.

Speaker Change: And during the quarter, we continue to focus our product development, redirect our plans, and guide our selling programs toward innovative, quick payback solutions that drive productivity. A cornerstone for the pivot is rooted in customer, in our customer connection.

Speaker Change: Standing side-by-side with the technicians, observing the work, witnessing the difficulties of modern and complex repair, and using the insights gained to create a tool that makes especially difficult tasks

Nicholas Pinchuk: In the second quarter, those insights let the tool group to design a new torque adapter for use on Ford E-Series commercial vans. The standard procedure for basic brake repair on that model requires the rear caliper bolts to be torqued at over 160 foot-pounds. Not so easy. And the task made doubly difficult because the bolt is obstructed, making it impossible to access the area with standard tooling without removing auxiliary parts, a big time meter. So we've specifically configured a 21 millimeter, 12.6 inch flat adapter with a half inch hex drive to make the work easier and specification.

Nicholas T. Pinchuk: In the second quarter, those insights led the tool group to design a new torque adapter for use on Ford E-Series commercial vans. The standard procedure for basic brake repair on that model requires the rear caliber bolts to be torqued at over 160 foot-pounds.

Speaker Change: Much easier. In the second quarter, those insights led the tool group to design a new torque adapter for use on Ford E-Series commercial vans. The standard procedure for basic brake repair on that model requires the rear caliber bolts to be torqued at over 160 foot-pounds.

Nicholas T. Pinchuk: Not so easy. And the task is doubly difficult because the bolt is obstructed, making it impossible to access the area with standard tooling without removing auxiliary parts, a big time eater. So we've specifically configured a 21-millimeter, 12.6-inch flat adapter with a half-inch hex drive to make the work easier and more precise.

Speaker Change: Not so easy.

Speaker Change: And the task made doubly difficult because the bolt is obstructed.

Speaker Change: Making it impossible to access the area with standard tooling without removing auxiliary parts. A big time eater.

Speaker Change: So, we've specifically configured a 21mm, 12.6 inch flat adapter with a half inch hex drive to make the work easier and specification.

Nicholas Pinchuk: The device nestles perfectly between the particular obstructions on the model, engaging the fastener, turning a time-consuming task into one of just seconds, and freeing the tech up to tackle the next repair order. It's made in our Elizabethan Tennessee plant, and it brings great value to the techs working on the E-Series, and you know there's a lot of them. Another example is the struggle observed when we observed when removing a canister cap that houses the fuel filter on Ford Super Duty trucks. Access to the 36 millimeter hex structure on top of the cap is impeded by other components.

Nicholas T. Pinchuk: The device nestles perfectly between the particular obstructions on the model, engaging the fastener, turning a time-consuming task into one of just seconds, and freeing the tech up to tackle the next repair order. It's made in our Elizabethan, Tennessee plant, and it brings great value to the techs working on the E-Series, and you know there are a lot of them. Another example is the struggle we observed when removing the canister cap that houses the fuel filter on Ford Super Duty trucks.

Speaker Change: The device nestles perfectly between the particular obstructions on the model, engaging the fastener, turning a time-consuming task into one of just seconds.

Speaker Change: and freeing the tech up to tackle the next repair order. It's made in our Elizabethan, Tennessee plant, and it brings great value to the techs working on the E-Series, and you know, there's a lot of them.

Speaker Change: Another example is the struggle we observed when removing a canister cap that houses the fuel filter on Ford Super Duty trucks.

Nicholas T. Pinchuk: Access to the 36mm hex structure on the top of the cap is impeded by other components, so standard pliers or sockets are out. Seeing the problem, our team created a special, low-profile socket, tapered gradually, just to slide into position under the blocking hoses, and then, using a standard ratchet and extension, easily removing the cap, complete the repair, and complete the repair.

Speaker Change: Access to the 36mm hex structure on top of the cap is impeded by other components. Standard pliers or sockets are out.

Nicholas Pinchuk: Standard pliers or sockets are out. Seeing the problem, our team created a special low profile socket tapered gradually just to slide into position under the blocking holes and then, using a standard ratchet and extension, easily removing the clack of the cap. Complete the repair, a complicate and complete the repair, a complicated job made much easier. Produced in our Milwaukee plant, it's another quick way back item that makes a substantial difference, and the techs love it. A final example comes from observing technicians walking to and from the work piece, back and forth from the buck, to achieve standard pliers for basic tasks.

Speaker Change: Seeing the problem, our team created a special, low-profile socket, tapered gradually, just to slide into position under the blocking hoses, and then...

Speaker Change: Using a standard ratchet and extension, easily removing the cap. Complete the repair, and complete the repair. A complicated job made much easier.

Nicholas T. Pinchuk: A complicated job made much easier. Produced in our Milwaukee plant, it's another quick payback item that makes a substantial difference, and the techs love it. A final example comes from observing technicians walking to and from the workpiece, back and forth from their work, to achieve standard pliers for basic tasks. A compact design seemed to be the solution, so we expanded our triple joint plier line to develop a small 4.5 inch plier set with three models, a combination of long nose and a plank drive slip joint version for versatility, and they were all pocket sized to be always at the ready, pull it out of your pocket and you're ready to go, and all designed to allow immediate access to remove low torque fasteners in places, to pull fuses, to adjust hoses, or provide some additional gripping leverage for basic repairs or just inspections.

Speaker Change: Produced in our Milwaukee plant, it's another quick payback item that makes a substantial difference and the techs love it.

Speaker Change: A final example comes from observing technicians walking to and from the workpiece.

Nicholas Pinchuk: A compact design seemed to be the solution, so we expanded our triple joint plier line to develop a small 4.5 inch plier set with three models: a combination of long nose and a flank drive slip joint version for versatility, and they were all pocket sized to be always at the ready. Pull it out of your pocket and you're ready to go, and all designed to allow immediate access to remove low torque fasteners and places to pull food, to adjust hoses or provide some additional gripping leverage for basic repair or just inspections. The new unit saves steps and makes work easier in tight spaces, and they're offered in two-handle models.

Speaker Change: Back and forth from the box to achieve standard pliers for basic tasks. A compact design seemed to be the solution. So we expanded our triple joint plier line to develop a small 4.5 inch plier set with three models, a combination of long nose and a plank drive slip joint version for versatility.

Speaker Change: And they were all pocket-sized to be always at the ready, pull it out of your pocket and you're ready to go. And all designed to allow immediate access, to remove low-torque fasteners in places, to pull fuses, to adjust hoses, or provide some additional gripping leverage for basic repairs or just inspections.

Nicholas T. Pinchuk: The new units save steps and make work easier in tight spaces, and they're offered in two handle models, a cushioned grip addition to reduce hand fatigue, and, for the first time, our bare metal, diamond plate texture that provides a superior grip even with sweaty or oily hands. Cold forged in the U.S., the new pliers are a game changer, and the rollout was a huge hit, making our million dollar hit product status just during the initial launch.

Speaker Change: The new units save steps and make work easier in tight spaces and they're offered in two handle models, a cushioned grip addition to reduce hand fatigue.

Nicholas Pinchuk: A cushioned grip addition to reduce hand fatigue, and for the first time, our bare metal diamond plate texture that provides superior grip, even with sweaty or oily hands. Cold forge in the US, the new pliers are a game changer, and the rollout was a huge hit, making our million dollar hit product status just during the initial launch. YouTube, Pivoting to Technicians Preferences, Producing Innovative, Quick Paybacks, Making Work Easier, New Tools Matched to the Path and Guided by Customer Connection, Bringing Quick Value to the Text, to the Text, and you can see the value play out in the Gross margins.

Speaker Change: And for the first time, our bare metal, diamond plate texture.

Speaker Change: that provides a superior grip even with sweaty or oily hands.

Speaker Change: Cold Forge in the U.S., the new pliers, you know, a game-changer. And the rollout was a huge hit, making our million-dollar hit product status just during the initial launch. Well, that's the tools group.

Nicholas T. Pinchuk: Well that's the tool. Pivoting to Technicians' Preference, Producing innovative, quick paybacks, making work easier, new tools match to the task and guided by customer connection, bringing quick value to the tech and to the text. And you can see the value play out in the gross margins.

Speaker Change: Pivoting to Technicians' Preferences.

Speaker Change: Producing innovative, quick paybacks, making work easier, new tools matched.

Speaker Change: to the task and guided by customer connection. Bringing quick value to the text, to the text, and you can see the value play out in the gross margins. Bringing quick value to the text.

Nicholas Pinchuk: Bringing quick value to the text, and then you can see that play out in the gross margins, almost flat in the downturn. You can also see, I think, our unwavering support for the franchisees in the operating expense. It was about flat, even in the turbulence, even in the downturn, even with the lower sales. We'll maintain our training, our programs, and our efforts in the field, even in this turbulence. You see, we believe the uncertainty will receive, and we want the network to be strong and fully loaded when that occurs.

Nicholas T. Pinchuk: And you can see that play out in the gross margins, almost flattening them out. You can also see... wavering support for the franchisees in the operating. It was about flat, even in the turbulence, even in the downturn, even with the lower sails. We'll maintain our training, our programs, and our efforts in the field. Unknown Speaker Even in this turbulence.

Speaker Change: And you can see that play out in the gross margins, almost flat in a downturn.

Speaker Change: You can also see, I think...

Speaker Change: are on wavering support for the franchisees in the operating expense.

Speaker Change: It was about flat, even in the turbulence, even in the downturn, even with the lower sails.

Speaker Change: We'll maintain our training, our programs, and our efforts in the field.

Nicholas T. Pinchuk: You see, we believe the uncertainty will recede, and we want the network to be strong and fully loaded when that occurs. Now for our Group sales of $458.8 million in the quarter, representing a $4.3 million or 1% organic increase that was partially offset by $1.5 million of unfavorable foreign currency translations. Those gains reflected higher activity with OEM dealerships attenuated by lower sales in the diagnostics division. The OI margin was an even 25%, rising 60 basis points and among the group's best.

Speaker Change: Even in this turbulence.

Speaker Change: You see, we believe the uncertainty will recede, and we want the network to be strong and fully loaded when that occurs.

Nicholas Pinchuk: Now for RS&I. Group sales of 458.8 million in the quarter, representing a 4.3 million, a 1% organic increase that was partially offset by 1.5 million of unfavorable rapport and currency translations. Those gains reflected higher activity with OAM dealerships, attenuated by lower sales in the diagnostics of the vision. The OIM margins, it was an even 25%, rising 60 basis points, and among the group's best. The numbers reflect the strength of RS&I products and programs for repair shop owners and managers as we help them match the evolving challenges of the modern car park. Speaking of the product evolutions and our progress with OAM programs, the traditional method of lifting vehicles is becoming more complex with the onset of new hybrid and EV platforms. The batteries require changes and lift points to adjust for the different center of gravity on EVs.

Speaker Change: Now for RS&I.

Arash: Group sale of $458.8 million in the quarter representing a $4.3 million or 1% organic increase that was partially offset by $1.5 million of unfavorable foreign currency translations.

Arash: Those gains reflected higher activity with OEM dealerships attenuated by lower sales in the diagnostics division. The OI margin was an even 25%, rising 60 basis points and among the group's best.

Nicholas T. Pinchuk: The numbers reflect the strength of RS&I products and programs for repair shop owners and managers as we help them match the evolving challenges of the modern car park. Speaking of product evolutions and our progress with OEM programs, the traditional method of lifting vehicles is becoming more complex with the onset of new hybrid and EV platforms. The batteries require changes in lift points to adjust for the different center of gravity on EVs.

Arash: The numbers reflect the strength of RS&I products and programs for repair shop owners and managers as we help them match the evolving challenges of the modern car part.

Arash: Speaking of the product evolutions and our progress with OEM programs, the traditional method of lifting vehicles is becoming more complex with the onset of new hybrid and EV platforms. The batteries require changes in lift points.

Nicholas T. Pinchuk: And to complicate the matter, each model design presents a different problem. In response, we designed steel floor plates matched to particular models that serve as guides in positioning the vehicle in the exact location that puts the lift arms in the proper place for that vehicle, enabling a safe procedure and an easy lift. The OEMs and the shops enthusiastically received the innovation as another in a long line of modifications needed to match the evolving car park.

Nicholas Pinchuk: And to complicate the matter, each model design presents a different problem. In response, we design steel floor plates, matched to particular models that service guides and positioning the vehicles in the exact location that puts the lift arms in the proper place for that vehicle, enabling a safe procedure and an easy lift. The OEMs and the shops, they enthusiastically see the innovation as another in a long line of the modifications needed to match the evolving car park. They need to facilitate to match that change, and we're helping them do it. Another successful R&R RS&I release was the ProCut X1HD on vehicle brake lathe.

Arash: to adjust for the different center of gravity on EVs and to complicate the matter.

Arash: Each model design presents a different problem.

Arash: In response, we designed steel floor plates matched to particular models that serve as guides in positioning the vehicle in the exact location that puts the lift arms in the proper place for that vehicle, enabling a safe procedure and an easy lift.

Arash: The OEMs and the shops, they enthusiastically received the innovation as another in a long line of the modifications needed to match the evolving car park.

Nicholas T. Pinchuk: They need to facilitate to match that change, and we're helping them do it. Another successful R&I release was the ProCut X1 HD on-vehicle brake lathe, specifically for heavy-duty platforms like buses, fire engines, and semi-trucks. The result is a fully restored component that supports optimized brake performance without the need for a replacement. The previous choice for heavy-duty brake repair work was to disassemble the brake assembly or to either order new parts or smooth the rotor on a stand-alone bench lathe.

Arash: They need to facilitate to match that change and we're helping them do it.

Arash: Another successful R&I release was the Procut X1HD on-vehicle brake light.

Nicholas Pinchuk: Specifically for heavy-duty platforms like buses, fire engines, and semi trucks. The lathe cuts away imperfections and abrasions on a brake's rotor, the imperfections and abrasions on a brake's rotor surface that always arise during regular operations. The result is a fully restored component that supports optimized brake performance without the need of replacement. The previous choice for heavy-duty brake repair work was the disassemble of brake assembly, and either order new parts or smooth the rotor out of standalone bench lathe. In either case, a laborious process. The new ProCut design avoids both the time and the effort to lift the heavy components off the vehicle and eliminates the cost of new parts.

Arash: Specifically, for heavy-duty platforms like buses, fire engines, and semi-trucks, the lathe cuts away imperfections and abrasions on a brake's rotor surface, V, imperfections and abrasions on a brake's rotor surface, that always arise during regular operations.

Arash: The result is a fully restored component that supports optimized brake performance without the need of a replacement. The previous choice for heavy duty brake repair work was to disassemble the brake assembly or either order new parts or smooth the rotor on a stand-alone bench lathe.

Nicholas T. Pinchuk: In either case... A laborious process. The new Pro-Cut design avoids both the time and the effort to lift the heavy components off the vehicle, and it eliminates the cost of new parts. We believe it's another game changer. Garage owners have seen the value, and we project that the Pro-Cut design will become the industry standard. Also on RS&I, seeing a car aligner serves the vehicle collision market, serves the vehicle collision mark, and serves the vehicle collision market with a number of heavy-duty items.

Arash: In either case...

Speaker Change: A laborious process.

Speaker Change: The new Pro-Cut design avoids both the time and the effort to lift the heavy components off the vehicle, and it eliminates the cost of new parts. We believe it's another game-changer. Garage owners have seen the value, and we project that the Pro-Cut design will become the industry standard. Also on RS&I.

Nicholas Pinchuk: We believe it's another game changer. Garage owners have seen the value, and we project that the ProCut design will become the industry standard. Also in R&R, see a car aligner serves the vehicle collision market. serves the Veal Collision Market, serves the Veal Collision Market with a number of heavy-duty items. A good example, during the quarter, is the release of our low-polpile frame bench, innovatively designed for holding the workpiece at an optimal height, making it easier for technicians to interact with the damaged vehicle. The bench's rugged for heavy collision work integrates with our existing pulley solutions that stretch and contort the chassis back into position.

Speaker Change: See you in a car aligner serves the vehicle collision market

Speaker Change: serves the vehicle collision market.

Speaker Change: ...serves the vehicle collision market with...

Nicholas T. Pinchuk: A good example during the quarter is the release of our low profile frame bench. Innovatively designed for holding the workpiece at an optimal height, making it easier for technicians to interact with the damaged vehicle. The bench is rugged for heavy collision work and integrates with our existing pulley solutions that stretch and contort the chassis back into position.

Speaker Change: A number of heavy-duty items.

Speaker Change: A good example, during the quarter.

Speaker Change: is the release of our low-profile frame bench.

Speaker Change: Innovatively designed for holding the workpiece at an optimal height, making it easier for technicians to interact with the damaged vehicle.

Speaker Change: The bench is rugged for heavy collision work and integrates with our existing pulley solutions that stretch and contort the chassis back into position. The ability to raise and lower the bench in multiple positions while still engaging with the vehicle reduces fatigue with the user and makes the process much easier.

Nicholas Pinchuk: The ability to raise and lower the bench in multiple positions while still engaging with the vehicle reduces fatigue with the user and makes the process much easier. The collision space is quite robust. Driven by the changing vehicles, and Carliner has been on a continuing positive trajectory, and a new bench makes our advantage of that market even stronger. RS and I, expanding its reach with shop owners and managers, confronting the increased complexity, focusing on developing innovations that simplify the difficult and helps shops prosper along the way.

Nicholas T. Pinchuk: The ability to raise and lower the bench in multiple positions while still engaging with the vehicle reduces fatigue with the user and makes the process much easier. The collision space is quite robust, driven by changing vehicles, and Car-O-Liner has been on a continuing positive trajectory, and the new bench makes our advantage in that market even stronger. RSI, expanding its reach with shop owners and managers, confronting increased complexity, focusing on developing innovations that simplify the difficult and help shops prosper along the way. Well, those are the... Press for more along the way. For those, The RS&I quarter was quite, Well, those are the second quarter results. Tools group, down.

Speaker Change: The collision space is quite robust, driven by the changing vehicles, and Car-O-Liner has been on a continuing positive trajectory, and the new bench makes our advantage in that market even stronger.

Speaker Change: RS&I expanding its reach with shop owners and managers, confronting the increased complexity, focusing on developing innovations that simplify the difficult and help shops prosper along the way. Well, those are the...

Nicholas Pinchuk: Well, those are the press for along the way. Well, those, the RS and I quarter was quite strong.

Speaker Change: Press for along the way.

Nicholas Pinchuk: Well, those are the second quarter results. Tools group down, impacted by uncertainty, pivoting the customer preference, launching new product, holding the gross margins and maintaining the network. CNI and RS and I, providing the multi-sector power of customer connection and new product, recording strong proper ability, balancing the headwinds of technician uncertainty and the overall corporation, launching a broad range of products from tapered sockets to industrial powered tools to collision benches, sales about flat, OI margin, 23.8%, 22.8%, excluding the legal, the legal benefits, one of our highest, an EPS $5.07, 491, excluding the legal item, setting a new high, performance achieved against the wind.

Speaker Change: The arsenic order was quite strong.

Speaker Change: Well, those are the second quarter results.

Nicholas T. Pinchuk: Impacted by Uncertainty, Pivoting to Customer Preference, Launching New Products, Holding the Gross Margins and Maintaining the Network, CNI and RS&I, Providing the Multi-Sector Power of Customer Connection and New Products, Recording Strong Property Ability, Balancing the Headwinds of Technician Uncertainty and the Overall Corporation, Launching a Broad Range of Products from Tapered Sockets to Industrial Power Sales About Flat, OI Margin 23.8%, 22.8% excluding the legal benefits, one of our highest, and EPS $5.07, $4.91 excluding the legal item, setting a new high. Performance Achieved Against the Wind It was an encouraging quarter. Now, I'll turn the call over to Aldo. Aldo.

Speaker Change: Tools group, down.

Speaker Change: Impacted by Uncertainty, Pivoting to Customer Preference, Launching New Products, Holding the Gross Margins, and Maintaining the Network.

Speaker Change: C&I and RS&I, providing the multi-sector power of customer connection and new product, recording strong profitability, balancing the headwinds of technician uncertainty.

Speaker Change: and the overall corporation, launching a broad range of products, from tapered sockets, to industrial power tools, to collision benches.

Speaker Change: Sales about flat. OI margin, 23.8%. 22.8% excluding the legal benefits, one of our highest. And EPS, $5.07, $4.91 excluding the legal item, setting a new high.

Nicholas Pinchuk: It was an encouraging quarter.

Speaker Change: Performance Achieved Against the Wind.

Aldo Pagliari: Now it's on the call over to Aldo.

Aldo Pagliari: Aldo. Thanks, Nick. Our consultant has offered any results to summarize on slide six: net sales of $1 billion, $179.4 million in the quarter, compared to $1 billion, $191.3 million last year, reflecting a 1.1% organic sales decline in $5.7 million of unfavorable form currency translation, partially offset by $7.3 million of acquisition related sales. Sales activity was similar to what we experienced in the first quarter, while our franchise van channel revenues continue to be dampened by afflicted technician confidence. Our sales repair shop owners and managers again increased year over year. Encouragingly, activity with customers serving the critical industries remained robust.

Speaker Change: It was an encouraging quarter.

Aldo J. Pagliari: Thanks, Nick. Our consolidated operating results are summarized on slide 6. Net sales of $1,179.4 million in the quarter compared to $1,191.3 million last year, reflecting a 1.1% organic sales decline and $5.7 million of unfavorable foreign currency translation partially offset by $7.3 million of acquisition-related sales. Our sales activity was similar to what we experienced in the first quarter. While our franchise van channel revenues continue to be dampened by afflicted technician confidence, our sales of repair shop owners and managers again increased year over year. Additionally, activity with customers serving the critical industries remained robust.

Speaker Change: Now I'll turn the call over to Aldo. Aldo.

Aldo: Thanks Nick. Our consolidated operating results are summarized on slide 6.

Aldo J. Pagliari: Consolidated gross margin of 50.6% compared to 50.7% last year, reflecting lower sales volumes largely offset by savings from the company's RCI initiative. Operating expenses as a percentage of net sales of 26.8% compared to 27.4% last year. In the quarter, as noted in our press release, operating expenses included an $11.2 million benefit for the final payments received associated with the legal matter.

Aldo: Net sales of $1,179,400,000 in the quarter compared to $1,191,300,000 last year.

Aldo: Reflecting a 1.1% organic sales decline, and $5.7 million of unfavorable foreign currency translation, partially offset by $7.3 million of acquisition-related sales.

Speaker Change: Sales activity was similar to what we experienced in the first quarter, while our franchise van channel revenues continued to be dampened by afflicted technician confidence.

Speaker Change: Our sales of repair shop owners and managers again increased year over year. Encouragingly, activity with customers serving the critical industries remained robust.

Aldo Pagliari: Consolidated gross margin of 50.6%, compared to 50.7% last year, reflecting the lower sales volumes largely offset by savings from the company's RCI initiatives. Operating expenses as a percentage of net sales of 26.8%, compared to 27.4% last year. In the quarter, as noted in our press release, operating expenses included an $11.2 million benefit for the final payments received associated with the legal matter. The 60 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payments, partially offset by the effects of lower sales volume. Operating earnings before financial services of $280.3 million in the quarter, including the benefit from the legal payments, compared to $277 million in 2023.

Speaker Change: Consolidated gross margin of 50.6% compared to 50.7% last year, reflecting the lower sales volumes largely offset by savings from the company's RCI initiatives.

Speaker Change: Operating expenses as a percentage of net sales of 26.8% compared to 27.4% last year.

Speaker Change: In the quarter, as noted in our press release, operating expenses included an $11.2 million benefit for the final payments received associated with the legal matter.

Aldo J. Pagliari: The 60 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payments, partially offset by the effects of lower sales volume. Operating earnings before financial services of $280.3 million in the quarter, including the benefit from the legal payments, compared to $277 million in 2023, as a percentage of net sales operating margin before financial services of 23.8%, including a 100 basis point benefit from the legal payments compared to 23.3% last year.

Speaker Change: The 60 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payments partially offset by the effects of lower sales volumes.

Speaker Change: Operating earnings before financial services of $280.3 million in the quarter, including the benefit from the legal payments, compared to $277 million in 2023.

Aldo Pagliari: As a percentage of net sales, operating margin before financial services of 23.8%, including a 100 basis point benefit from the legal payments, compared to 23.3% last year. Financial services revenue of $104.5 million in the second quarter of 2024, compared to $93.4 million, while operating earnings of $70.2 million compared to $66.9 million in 2023. Consolidated operating earnings of $350.5 million, which includes the legal benefits, compared to $343.9 million last year. As a percentage of revenues, the operating earnings margin of 27.4%, including the legal payments, compared to 26.8% in 2023. Our second quarter effective income tax rate of 22.6% compared to 22.9% last year.

Speaker Change: As a percentage of net sales operating margin before financial services of 23.8%, including a 100 basis point benefit from the legal payments, compared to 23.3% last year.

Aldo J. Pagliari: Financial Services revenue of $145 million in the second quarter of 2024, compared to $93.4 million last year, while operating earnings of $70.2 million, compared to $66.9 million in 2023. Consolidated operating earnings of $350.5 million, which includes the legal benefit, compared to $343.9 million last. As a percentage of revenues, the operating earnings margin of 27.4%, including the legal payments, compared to 26.8% in 2023. Our second quarter effective income tax rate was 22.6%, compared to 22.9% last year.

Speaker Change: Financial Services revenue of $145 million in the second quarter of 2024, compared to $93.4 million last year, while operating earnings of $70.2 million, compared to $66.9 million in 2023.

Speaker Change: Consolidated operating earnings of $350.5 million, which includes the legal benefit, compared to $343.9 million last year.

Speaker Change: As a percentage of revenues, the Operating Earnings Margin of 27.4%, including the legal payments, compared to 26.8% in 2023. Our second quarter effective income tax rate of 22.6%, compared to 22.9% last year.

Aldo Pagliari: Net earnings of $271.2 million or $5.7 per diluted share, including an $8.7 million or $16 per diluted share after tax benefits from the legal payments, compared to $264 million or $4.89 per diluted share in the second quarter of 2023.

Aldo J. Pagliari: Net earnings of $271.2 million or $5.07 per diluted share, including an $8.7 million or $0.16 per diluted share after tax benefit from the legal payments, compared to $264 million or $4.89 per diluted share in the second quarter of 2020. Now, let's start with our segment results for the quarter. Starting with the C&I group on slide 7, sales of $372 million compared to $364.2 million last year, reflecting a 1.2% organic sales gain and $7.3 million of acquisition-related sales, partially offset by $3.8 million of unfavorable foreign currency translation.

Speaker Change: Net earnings of $271.2 million or $5.07 per diluted share, including an $8.7 million or $0.16 per diluted share after tax benefit from the legal payments, compared to $264 million or $4.89 per diluted share in the second quarter of 2023.

Aldo Pagliari: Now let's start to our second results for the board. Starting with the CNI Group on slide 7, sales of $372 million compared to $364.2 million last year, reflecting a 1.2% organic sales gain and $7.3 million of acquisition-related sales, partially offset by $3.8 million of unfavorable foreign currency translation. The organic increases primarily due to a double-digit gain in sales to customers in critical industries, partially offset by low single-digit decline in the segments European-based handfuls of business and a double-digit reduction in the power tools operation to land or mostly associated with lower inter-segment sales. With respect to critical industries, defense-related sales are strong as it wasn't activity in the aviation sector; gross margin approved 220 basis points to 41.7% in the second quarter from 39.5% in 2023.

Aldo J. Pagliari: The organic increase is primarily due to a double-digit gain in sales to customers in critical industries, partially offset by a low single-digit decline in the segment's European-based hand tools business and a double-digit reduction in the power tools operation, the latter mostly associated with lower inter-segment sales. With respect to critical industries, defense-related sales are strong, as is activity in the aviation sector.

Speaker Change: Now let's start to our segment results for the quarter.

Speaker Change: Starting with the C&I group on slide 7.

Speaker Change: Sales of $372 million compared to $364.2 million last year reflecting a 1.2% organic sales gain and $7.3 million of acquisition related sales, partially offset by $3.8 million of unfavorable foreign currency translation.

Speaker Change: The organic increase is primarily due to a double-digit gain in sales to customers in critical industries, partially offset by low single-digit decline in the segment's European-based hand tools business and a double-digit reduction in the power tools operation, the latter mostly associated with lower inter-segment sales.

Speaker Change: With respect to critical industries, defense-related sales are strong, as was activity in the aviation sector.

Aldo J. Pagliari: Gross margin improved 220 basis points to 41.7% in the second quarter from 39.5% in 2023. This was largely due to increased sales volumes in the higher gross margin critical industry sector, savings from RCI initiatives, and 50 basis points of benefit from acquisitions. Operating expenses as a percentage of sales rose 150 basis points to 25% in the quarter from 23.5% in 2023, primarily due to investments in personnel and other costs and a 60 basis point impact from acquisition.

Speaker Change: Gross margin approved 220 basis points to 41.7% in the second quarter from 39.5%.

Aldo Pagliari: This was largely due to the increased sales volumes in the higher gross margin critical industry sector, savings from RCI initiatives, and 50 basis points of benefit from acquisitions. Operating expenses as a percentage of sales rose 150 basis points to 25% in the quarter from 23.5% in 2023, primarily due to investments in personnel and other costs, and a 60 basis point impact from acquisitions. Operating earnings for the CNI segment of $62.2 million compared to $58.1 million last year, the operating margin of 16.7%, compared to 16% in 2023, and represented a new milestone of achievement for the segment.

Speaker Change: in 2023. This was largely due to the increased sales volumes in the higher gross margin critical industry sector, savings from RCI initiatives, and 50 basis points of benefit from acquisitions.

Speaker Change: Operating expenses as a percentage of sales rose 150 basis points to 25% in the quarter, from 23.5% in 2023, primarily due to investments in personnel and other costs, and a 60 basis point impact from acquisitions.

Aldo J. Pagliari: Operating earnings for the C&I segment of $62.2 million compared to $58.1 million last year. The operating margin of 16.7% compared to 16% in 2023 and represented a new milestone of achievement for the segment. Turning now to slide eight.

Speaker Change: Operating earnings for the C&I segment of $62.2 million compared to $58.1 million last year. The operating margin of 16.7% compared to 16% in 2023 and represented a new milestone of achievement for the segment.

Aldo Pagliari: Turning out of slide 8, sales in the Snap-on-Tools loop of $4.8 million compared to $523.1 million a year ago, reflecting a 7.7% organic sales decline in $800,000 of untaverable foreign currency translation. Analogist with last quarter, the organic decrease reflects a high single-digit decline in our US business, partially offset by a low single-digit gain in our international operations. Gross margin of 48.8% in the quarter declined 20 basis points from 49% last year, and that's primarily due to lower sales volumes. Operating expenses as percentage of sales rose 230 basis points to 25% in the quarter from 22.7% in 2023, largely due to the effects of lower sales volume.

Aldo J. Pagliari: Sales of the Snap-On tools grew to $482 million compared to $523.1 million a year ago, reflecting a 7.7% organic sales decline and $800,000 of unfavorable foreign currency translation. Analogous with last quarter, the organic decrease reflects a high single-digit decline in our U.S. business, partially offset by a low single-digit gain in our international operations. Gross margin of 48.8% in the quarter declined That's primarily due to lower sales volume. Operating expenses as a percentage of sales rose 230 basis points to 25% in the quarter from 22.7% in 2023, largely due to the effects of lower sales volume.

Speaker Change: Turning now to Slide 8.

Speaker Change: Sales of the Snap-On tools grew to $482 million compared to $523.1 million a year ago, reflecting a 7.7% organic sales decline and $800,000 of unfavorable foreign currency translation.

Speaker Change: Analogous with last quarter.

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

Speaker Change: Gross margin of 48.8% in the quarter declined 20 basis points from 49% last year, and that's primarily due to sales, lower sales volumes.

Speaker Change: Operating expenses as a percentage of sales rose 230 basis points to 25% in the quarter from 22.7% in 2023, largely due to the effects of lower sales volume.

Aldo J. Pagliari: Operating earnings for the Snap-On Tools Group of $114.8 million compared to $137.7 million last year; the operating margin of 23.8% compared to 26.3% in 2023. Transcripts provided by Transcription Outsourcing, LLC. Sales of $454.8 million compared to $452 million in 2023, reflecting a 1% organic sales increase partially offset by $1.5 million of unfavorable foreign currency translation. The organic gain includes a high single-digit increase in activity with OEM dealerships, partially offset by a mid-single-digit decline in sales of diagnostic and repair information products to independent repair shop owners and managers.

Aldo Pagliari: Operating earnings for the Snap-on Tools group of $114.8 million compared to $137.7 million last year. The operating margin of 23.8% compared to 26.3% in 2023.

Speaker Change: Operating earnings for the Snap-On Tools Group of $114.8 million compared to $137.7 million last year, the operating margin of 23.8% compared to 26.3% in 2023.

Aldo Pagliari: Trend to DRS and I Groups shown Slide 9. Sales of $454.8 million compared to $452 million in 2023, reflecting a 1% organic sales increase, partially upset by $1.5 million of unfavorable foreign currency translation. The organic gain includes a high single-digit increase in activity with OEM dealerships, partially upset by amidst single-digit decline in sales of diagnostic and repair information products to independent repair shop owners and managers. Gross margin improved 50 basis points to the 45.5% from 45% last year, primarily due to savings from RCI initiatives. Operating expenses as percentage of sales of 20.5% improved 10 basis points from 20.6% last year, and the operating earnings for the RSI group of $113.6 million compared to $110.4 million last year.

Speaker Change: Turn to the RS&I group, shown on slide 9.

Speaker Change: Sales of $454.8 million compared to $452 million in 2023, reflecting a 1% organic sales increase partially offset by $1.5 million of unfavorable foreign currency translation.

Speaker Change: The organic gain includes a high single-digit increase in activity with OEM dealerships, partially offset by a mid-single-digit decline in sales of diagnostic and repair information products to independent repair shop owners and managers.

Aldo J. Pagliari: Luke Junk, Sara Verbsky, Aldo Pagliari, Gary Prestopino, Scott Stember, David MacGregor Operating expenses as a percentage of sales of 20.5% improved 10 basis points from 20.6% last year, and the operating earnings for the RS&I group of $113.6 million compared to $110.4 million last year. The operating margin of 25% compared to 24.4% reported last year. Now turning to slide 10. Revenue from financial services increased $7.1 million, or 7.6%, to $100.5 million from $93.4 million last month, primarily reflecting the growth of the loan portfolio.

Speaker Change: Gross margin improved 50 basis points to 45.5% from 45% last year, primarily due to savings from RCI initiatives.

Speaker Change: Operating expenses as a percentage of sales of 20.5% improved 10 basis points from 20.6% last year, and the operating earnings for the RS&I group of $113.6 million compared to $110.4 million last year.

Aldo Pagliari: The operating margin of 25% compared to 24.4% reported last year.

Speaker Change: The operating margin of 25% compared to 24.4% reported last year.

Aldo Pagliari: Now 30 to slide 10. Revenue from financial services increased $7.1 million, or $7.6%, to $100.5 million from $93.4 million last year, primarily reflecting the growth of the loan portfolio. Financial services operating earnings of $70.2 million compared to $66.9 million in 2023. Financial services expenses were up $3.8 million from 2023 levels, including $3.5 million of higher provisions for credit losses. Sequentially, the provision for credit losses was lower by $1.3 million. In the second quarter of 2024 and 2023, the respective average yields on finance receivables were 17.7% and 17.6%. In the second quarter of 2024 and 23, the average yields on contract receivables were 8.9% and 8.6%, respectively.

Speaker Change: Now, turning to slide 10.

Speaker Change: Revenue from financial services increased $7.1 million or 7.6% to $100.5 million from $93.4 million last year, primarily reflecting the growth of the loan portfolio.

Aldo J. Pagliari: Financial Services operating earnings of $70.2 million compared to $66.9 million in 2023. Financial services expenses were up $3.8 million from 2023 levels, including $3.5 million of higher provisions for credit losses. However, sequentially, the provision for credit losses was lowered by 1.3%.

Speaker Change: Financial Services operating earnings of $70.2 million compared to $66.9 million in 2023.

Speaker Change: Financial Services expenses were up $3.8 million from 2023 levels, including $3.5 million of higher provisions for credit losses.

Speaker Change: Sequentially, the provision for credit losses was lowered by $1.3 million.

Aldo J. Pagliari: In the second quarter of 2024 and 2023, the respective average yields on finance receivables were 17.7% and 17.6%. In the second quarters of 24 and 23, the average yields on contract receivables were 8.9% and 8.6%, respectively. Total loan originations of $308.1 million in the second quarter represented a decrease of $18.2 million, or 5.6%, from 2023 levels, primarily reflecting a high single-digit decline in extended credit originations, partially offset by higher originations of contract receivables.

Speaker Change: In the second quarters of 2024 and 2023, the respective average yields on finance receivables were 17.7% and 17.6%. In the second quarters of 2024 and 2023, the average yields on contract receivables were 8.9% and 8.6% respectively.

Aldo Pagliari: So the loan originations of $308.1 million in the second quarter represented a decrease of $18.2 million or $5.6% from 2023 levels, primarily reflecting a high single-digit decline in extended credit originations, partially offset by higher originations of contract receivables. Consistent with the sales activity and the SNAP on tools group, extended credit originations of the U.S. declined and were only partially offset by growth in originations international.

Speaker Change: Total loan originations of $308.1 million in the second quarter represented a decrease of $18.2 million or 5.6% from 2023 levels, primarily reflecting a high single-digit decline in extended credit originations, partially upset by higher originations of contract receivables.

Aldo J. Pagliari: Consistent with the sales activity of the Snap-On Tools Group, extended credit origination in the U.S. declined, and we're only partially upset by growth in Originations International. What we just saw at 11. Our quarter-end balance sheet includes approximately $2.5 billion of gross financing receivables, with $2.2 billion from our U.S. operations. For extended credit or finance receivables, the US 60 day plus delinquency rate of 1.6% is up 30 basis points in the second quarter of 2023 but down 20 basis points sequentially from the 1.8% reported last. Trailing 12-month net losses for the overall extended credit portfolio of $58.6 million represented 2.9.4% of outstandings at quarter end.

Speaker Change: Consistent with the sales activity of the Snap-On Tools Group, extended credit originations in the U.S. declined, and we're only partially upset by growth in originations internationally.

Aldo Pagliari: For me to say 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 1.6% is up. 30 basis points from the second quarter of 2023, but down 20 basis points sequentially from the 1.8% report to last. quarter. Trailing 12-month net losses with the overall extended credit portfolio of $58.6 million represented 2.9% of outstanding record rate. Considering the current environment, we believe the delinquency and portfolio performance metrics remain relatively stable and are consistent with pre-COVID era experience.

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.

Speaker Change: For extended credit or financing rules, the U.S. 60-day plus delinquency rate of 1.6% is up 30 basis points from the second quarter of 2023, but down 20 basis points sequentially from the 1.8% report of last quarter.

Speaker Change: Trailing 12-month net losses for the overall extended credit portfolio of $58.6 million, represented 2.94% of outstandings at quarter end.

Aldo J. Pagliari: Considering the current environment, we believe that the liquidity and portfolio performance metrics remain relatively stable and are consistent with the pre-COVID era experience. Now turning to slide 12. Cash provided by operating activities of $301.1 million in the quarter represented 108% of net earnings, compared to $270.3 million last year.

Speaker Change: Considering the current environment, we believe the delinquency and portfolio performance metrics remain relatively stable and are consistent with pre-COVID era experience.

Aldo Pagliari: Now turning to slide 12. Cash provided by operating the activities of $301.1 million in quarter represented 108% of net earnings compared to $270.3 million last year. The increase, as compared to the second quarter of 2023, will actually reflect decreases in working investment and higher net earnings. Net cash used by investing activities of $60.2 million primarily reflected net additions to finance receivables of $41.2 million and capital expenditures of $23.2 million. Net cash used by financing activities of $127.9 million, including cash dividends of $98 million and the repurchase of $174,000 shares of common stock for $47.4 million under our existing share repurchase programs. As a quarter end, we had remaining availability to repurchase up to an additional $271.1 million of common stock under our existing authorization.

Speaker Change: Now turning to slide 12.

Speaker Change: Cash provided by operating activities of $301.1 million in the quarter represented 108% of net earnings and compared to $270.3 million last year.

Aldo J. Pagliari: The increase as compared to the second quarter of 2023 largely reflects decreases in working investment and higher net earnings. Net cash used by investing activities of $60.2 million, primarily reflecting net additions to finance receivables of $41.2 million and capital expenditures of $23.2 million. Net cash used by financing activities of $127.9 million, including cash dividends of $98 million, and the repurchase of 174,000 shares of common stock for $47.4 million under our existing share repurchase programs.

Speaker Change: Net cash used by investing activities of $60.2 million primarily reflected net additions to finance receivables of $41.2 million and capital expenditures of $23.2 million.

Speaker Change: Net cash used by financing activities of $127.9 million included cash dividends of $98 million and the repurchase of 174,000 shares of common stock for $47.4 million under our existing share repurchase programs.

Aldo J. Pagliari: As of quarter end, we have remaining availability to repurchase up to an additional $271.1 million of common stock under our existing authorization. Turning to slide 13, trade and other accounts receivable decreased $7.8 million from 2023 year-end. Day sales outstanding of 60 days were unchanged from year-end.

Speaker Change: As a quarter end, we had remaining availability to repurchase up to an additional $271.1 million of common stock under our existing authorization.

Aldo Pagliari: Turning to slide 13. Trade and other accounts receivable decreased $7.8 million from 2023 year end. Day sales outstanding of 60 days were unchanged from year end. Eventories decreased $40.9 million from 2023 year end. Trailing 12 month basis, inventory turns of 2.4 compared to year end of 2023. Our quarter end cash position of $1,232.7 million compared to $1.1 million, $1.5 million at year end of 2023. In addition to cash and expected cash flow from operations, we have more than $900 million available under our credit facilities. As a quarter end, there are no amounts outstanding under the credit facility, and there are no commercial paper volumes outstanding.

Speaker Change: Turning to slide 13.

Speaker Change: Trade and other accounts receivable decreased $7.8 million from 2023 year-end. Day sales outstanding of 60 days were unchanged from year-end. Inventories decreased $40.9 million from 2023 year-end.

Aldo J. Pagliari: Inventories decreased $40.9 million from 2023 year-end. On a trailing 12-month basis, inventory turns of 2.4 compared to 2.3 at year-end 2023. Our quarter-end cash position of $1,232,700,000 compared to $1,001,500,000 at year-end 2023. In addition to cash and expected cash flow from operations, we have more than $900,000,000 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 2.4 compared to 2.3 at year-end 2023.

Speaker Change: Our quarter-end cash position of $1,232,700,000 compared to $1,001,500,000 at year-end 2023. In addition to cash and expected cash flow from operations...

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

Aldo J. Pagliari: That concludes my remarks on our second quarter performance. I'll now briefly review a few outlook items for 2024. For the full year, we expect capital expenditures to be in the range of $100 million to $110 million.

Aldo Pagliari: I'll now briefly review a few Outlook items for 2024. For the full year, we expect that capital expenditures will be in the range of $1.0 million, $110 million, and we currently anticipate that our full year 2024 effective income tax rate will be in a range of 22 to 23 percent.

Speaker Change: That concludes my remarks on our second quarter performance. I'll now briefly review a few Outlook items for 2024.

Speaker Change: For the full year, we expect the capital expenditures will be in the range of $100 million to $110 million, and we currently anticipate that our full year 2024 effective income tax rate will be in a range of 22 to 23 percent. I'll now turn the call back to Nick for his closing thoughts. Nick?

Aldo J. Pagliari: And we currently anticipate that our full year 2024 effective income tax rate will be in a range of 22 to 23 percent. I'll now turn the call back to Nick for his closing thoughts.

Nicholas Pinchuk: I'll now turn the call back to Nick for his closing thoughts. Nick. Thanks, Alba. Wow. That's our second quarter. A period of continuing turbulence born out of the uncertainty in the grassroots detects. Uncertainly on the near-term environment, customers' texts that are cash-rich and confidence-poor. But it was also a period where our value-creating mechanism observing tasks right in the workplace, connecting with customers, and translating the insights in an innovation that can make critical tasks easier, where that core of our business model demonstrated that its efficacy stretches well beyond our traditional technician customer base, and it does so quite profitably.

Nicholas T. Pinchuk: Thanks, Aldo. Wow. That's our second course. A period of continuing turbulence born out of the uncertainty in the grass...

Nick: Thanks, Aldo.

Nick: Wow.

Nick: That's our second quarter.

Speaker Change: A period of continuing turbulence born out of the uncertainty in the grassroots.

Nicholas T. Pinchuk: Uncertainty about the near-term environment, customers, and techs that are cash-rich and competent. But it was also an interlude in which our value creation mechanis, Observing tasks right in the workplace, connecting with customers, and translating the insights into an innovation that can make critical tasks easier, demonstrated that its efficacy stretches well beyond our traditional technician customer base, and it does so quite profitably. It was an interlude in which our Snap-On value creation processes showed their ongoing strength, particularly visible in the tools group, where they drove product value and operating And you can see that written all across the quarter.

Speaker Change: to text. Uncertainty on the near-term environment. Customers text that are cash-rich and confidence-poor.

Speaker Change: But it was also a period.

Speaker Change: where our value-creating mechanism.

Speaker Change: Observing tasks right in the workplace, connecting with customers, and translating the insights in an innovation that can make critical tasks easier, where that core of our business.

Speaker Change: A core of our business model demonstrated that its efficacy stretches well beyond our traditional technician customer base, and it does so quite profitably.

Nicholas Pinchuk: It was an interlude in which our snap-on-value creation processes showed its on-crawling strength, particularly visible in the tourist group, where drove product value and operating efficiency that buttressed gross margins that stayed close to flat despite the lower volume. And it can see that written all across the quarter, the tools group, an uncertainty-driven decline in volume, continuing and unreduced support for its franchise network, but with profitable, quick payback products and RCI, keeping gross margins at reasonable levels, offsetting some of the volume impact. RS and I, seizing the opportunity to help shop owners and managers, matching the rising vehicle repair complexity and doing it very profitably, achieving an OI margin at 25%, one of its best.

Speaker Change: There was an interlude in which our Snap-On value creation processes showed its ongoing strength, particularly visible in the tools group, where it drove product value and operating efficiency that buttressed gross margins that stayed close to flat despite the lower volumes.

Nicholas T. Pinchuk: The Tools Group, an uncertainty-driven decline in volume, continuing an unreduced support for its franchise network, but with profitable quick payback products. And RCI, keeping gross margins at reasonable levels, offsetting some of the volume impact. RS&I, seizing the opportunity to help shop owners and managers, matching the rising vehicle repair complexity and doing it very profitably, achieving an OI margin of 25%, one of its best.

Speaker Change: And it can see that.

Speaker Change: Written all across the quarter, the Tools Group, an uncertainty-driven decline in volume, continuing an unreduced support for its franchise network, but with profitable quick payback products and RCI keeping gross margins at reasonable levels, offsetting some of the volume impact.

Speaker Change: RS&I, seizing the opportunity to help shop owners and managers, matching the rising vehicle repair complexity and doing it very profitably. Achieving an OI margin of 25%, one of its best.

Nicholas Pinchuk: CNI rolling out of the garage in critical industries, overcoming the recessions in Europe and the turbulence in Asia to grow on each theater, continuing the upward trajectory of its customized kidding business, driving expansion in critical industries and achieving an OI margin at 16.7%, up 70 basis points. It's highest ever. And it all came together for a positive performance for the overall enterprise; sales about flat against the uncertainty. OI margins 23.28%, 22.8%, excluding the legal payment, one of our very strongest and EPS $5.07, $4.91 without the legal payment, the highest for any Snap-On quarter. It was an encouraging period.

Nicholas T. Pinchuk: CNI, rolling out of the garage in critical industries, overcoming the recessions in Europe and the turbulence in Asia to grow in each theater, while continuing the upward trajectory of its customized kidding business. Driving expansion in critical industries and achieving an OI margin of 16.7%, [inaudible] And it all came together for a positive performance for the overall enterprise. Sales, about flat against the uncertainty. OI margins, 23.8%, 22.8% excluding the legal payment, one of our very strongest. And EPS, $5.70. $4.91 without the legal payment, the highest price for any Snap-On course.

Speaker Change: C&I rolling out of the garage in critical industries, overcoming the recessions in Europe and the turbulence in Asia to grow in each theater, continuing the upward trajectory of its growth.

Speaker Change: of its customized kitting business, driving expansion in critical industries and achieving an OI margin of 16.7 percent, up 70 basis points.

Speaker Change: It's high as ever.

Speaker Change: And it all came together for a positive performance for the overall enterprise.

Speaker Change: Sales, about flat against the uncertainty. OI margins, 23.8%, 22.8% excluding the legal payment, one of our very strongest. And EPS, $5.07.

Speaker Change: $4.91 without the legal payment, the highest for any Snap-On quarter.

Nicholas T. Pinchuk: It was an encouraging period, and we believe that with the strength of our business model, the opportunities inherent in our broad markets, and the considerable and hard-won experience of our team, Snap-On will remain resilient in the turbulence, making the most of its abundant possibilities in our markets and will continue to advance, making progress through 2024 and well beyond. Now, before I turn the call over to the operator, I'll speak directly to our franchisees and associates.

Nicholas Pinchuk: And we believe that with the strengths of our business model, with the opportunities inherent in our broad markets and with the considerable and hard-won experience of our team, Snap-On will remain resilient in the turbulence, making the most of its abundant possibilities on our markets and will continue to advance, making progress through 2024 and well beyond.

Speaker Change: It was an encouraging period.

Speaker Change: And we believe that with the strength of our business model, with the opportunities inherent in our broad markets, and with the considerable and hard-won experience of our team,

Speaker Change: Snap-On will remain resilient in the turbulence, making the most of its abundant possibilities on our markets, and will continue to advance, making progress through 2024 and well beyond.

Nicholas Pinchuk: Now, before I turn the call over to the operator, I'll speak directly to our franchisees and associates. I know a lot of you are listening. The strength Snap-On has demonstrated in the turbulence and the associated advantages we carry into the days ahead have been created by all of you. For the considerable capabilities you bring to bear every hour, you have my admiration. For the significant success you've achieved in the quarter and for many periods before, you have my congratulations. And for the unwavering belief you hold in the future of our team, you have my thanks.

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

Nicholas T. Pinchuk: I know a lot of you are listening. The strength Snap-On has demonstrated in the turbulence and the associated advantages we carry into the days ahead have been created by all of you for the considerable capabilities you bring to bear every hour. You have my admiration.

Speaker Change: I know a lot of you are listening.

Speaker Change: The strength Snap-On has demonstrated in the turbulence and the associated advantages we carry into the days ahead have been created by all of you.

Speaker Change: For the considerable capabilities you bring to bear every hour.

Operator: For the significant success you've achieved in the quarter and for many periods before, you have my congratulations, and for the unwavering belief you hold in the future of our team, you have my thanks. Now I'll turn the call over to the operator. Operator. Thank you, and we will now begin the question and answer session. To ask a question, you may press Star then 1 on your touch-tone phone.

Speaker Change: You have my admiration.

Speaker Change: For the significant success you've achieved in the quarter and for many periods before, you have my congratulations.

Speaker Change: And for the unwavering belief you hold in the future of our team,

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

Speaker Change: You have my thanks.

Operator: Thank you.

Operator: And we will now begin the question-and-answer session. To ask a question, you may press star-in-one on your touch-tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To restore your question, please press star-in-two.

Speaker Change: Now I'll turn the call over to the operator. Operator?

Speaker Change: Thank you, and we will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. And at this time, we will pause momentarily for the first question. And our first question today will come from Luke Junk with Baird. Please go ahead. Good morning.

Operator: And at this time, we will pause momentarily for the first question. And our first question today.

Speaker Change: To withdraw your question, please press star then 2. And at this time, we will pause momentarily for the first question.

Luke Young: Welcome from Luke Young with Baird. Please go ahead.

Speaker Change: And our first question today will come from Luke Junk with Baird. Please go ahead.

Luke L. Junk: Thanks for taking the questions, Nick. To start with, just hoping we could get an update on the facility expansion projects that you have going on right now, both kind of progress incrementally, timing, and then, you know, how things are progressing versus your expectations and to what extent you can leverage that to pivot the mix and, you know, Facility Expansions, I think, both Milwaukee and Elizabeth. Okay, facility expansion. I can talk about that. Look, Algona added some space that's already in place.

Patrick Buckley: Thanks for taking the questions, Nick.

Nicholas Pinchuk: To start with, just hoping we could get an update on the facility expansion projects that you have going on right now, both kind of progressing commandingly, timing, and then, you know, how things are progressing versus your expectations, and to what extent you can leverage that to pivot the mix and really focus on those quicker paybacks. In my case, folks are looking for access concerning what the art. Absolutely expansion, I think. Yeah. Okay, so the expansion, I can talk about that. Look, Algona added some space that's in place. They're starting to use it now. Now the thing is, you use it, but you figure out how to be more efficient.

Luke L. Junk: Good morning. Thanks for taking the questions, Nick. To start with, just hoping...

Luke L. Junk: We could get an update on the facility expansion projects that you have going on right now, both kind of progress incrementally, timing, and then, you know, how things are progressing versus your expectations and to what extent you can leverage that to pivot the mix and, you know, really focus on those quicker payback items that folks are looking for.

Speaker Change: Facility expansions, I think, both Milwaukee and, yeah.

Nicholas T. Pinchuk: They're starting to use it now. Now, the thing is, you use it, but you figure out how to be more efficient. So just because it's in place and you're in the saddle doesn't mean it's going to work at high efficiency.

Speaker Change: Okay, facility expansion, I can talk about that. Look, Algona added some space, that's in place, they're starting to use it now. Now, the thing is, you use it, but you figure out how to be more efficient. So just because it's in place and you're in the saddle doesn't mean it's going to work at high efficiency. But that's good.

Nicholas Pinchuk: So just because it's in place and you're in the saddle doesn't mean it's going to work at high efficiency. But that's creating some, breaking some bottlenecks out there and allowing us to build things like, you know, we're bringing out a new work bench. You know, we're bringing out a 36-inch small epic toolbox that's smaller than we ever saw before. We've had before, and therefore it's a lower price situation. You know, in other words, quicker payback items. So that's working in a Milwaukee. We're expanding 25% and we've got, we've expanded the machining area. Some of the machines are in.

Speaker Change: Breaking some bottlenecks out there and allowing us to build things, like, you know, we're bringing out a new work bench. You know, we're bringing out a three six inch.....

Speaker Change: Small epic toolbox that's smaller than we ever saw before we've had before and therefore it's a lower price

Speaker Change: Situational. In other words, quicker payback items. So that's working. In Milwaukee, we're expanding 25% and we've expanded the machining area. Some of the machines are in, we're still delivering others because they were ordered, frankly, to adjust to the pivot. So we've had partial expansion of some of our flexible socket impact lines and also some of our bit lines. So that'll be sort of developing through the expanding and getting better and bigger during the quarter. And as we move out, it'll get more and more efficient. And then we're building probably for the fourth quarter and the first quarter, we're building the more capacity into the plating line up there because we expand it. In Elizabeth, on the other hand, that's where we make the wrenches and hot forge them.

Nicholas Pinchuk: We're still delivering others because they were ordered, frankly, to adjust the pivot. So we've had partial expansion of some of our flexible socket impact lines and also some of our bit line. And we, so that'll be sort of developing through the expansion. We're expanding and getting better and bigger during the quarter. And as we move out, we'll get more and more efficient. And then we're building probably for the fourth quarter and first quarter; we're building the more capacity into the plating line up there because we expanded.

Nicholas Pinchuk: In Elizabeth, in another hand, that's where we make the wrenches and hot forge them. We've expanded the plating line already there, and that's up and operating. And we're putting more machines in there to fill another expansion to build more effective wrenches, you know, using cold forming to reduce the near net shape and making a lot raising our capacity for those for ratchets in that situation. And we're expanding our adjustable wrench capacity down there because it's in demand. And we can't build enough of them. So you have, though, that'll give you some examples. I think in terms of Algona.

Speaker Change: We've expanded the plating line already there, and it's up and operating, and we're putting more machines in there to fill another expansion, to build more effective wrenches, you know, using cold forming to reduce the near net shaping, raising our capacity for those, for ratchets in that situation, and we're expanding our adjustable wrench capacity down there, because it's in demand and we can't build enough of them.

Nicholas T. Pinchuk: But that's creating some, breaking some bottlenecks out there and allowing us to build things like, you know, we're bringing out a new workbench. We're bringing out a 36-inch small EPIC toolbox that's smaller than we ever saw before, than we've had before. And therefore, it's a lower price situation. For those, for ratchets in that situation, and we're expanding our adjustable wrench capacity down there because it's in demand and we can't build enough of them. So you have, though, that'll give you some examples, I think, in terms of Algona.

Nicholas T. Pinchuk: And it's a, I think Algona increases by about 25%. The Milwaukee increases by 25%. Algona's 30%, and Elizabethan will be 35% at this point.

Nicholas Pinchuk: And it's a, I think Algona increases by about 25%. The Milwaukee increases by 25%. Algona is 30%, and Elizabeth will be 35% at the end. So, and then so they're all in place. Some of it is working; some isn't. But what it has done is it broken some of the difficult work around. We've had in the places. So part of the things you see in in gross margin is some of the efficiencies that are coming out of the already, you know, partial expansions being completed and up and run it.

Speaker Change: So that will give you some examples, I think, in terms of Algona, and I think Algona increases by about 25 percent, Milwaukee increases by 25 percent, Algona is 30 percent, and Elizabethan will be 35 percent at the end.

Nicholas T. Pinchuk: So, and so they're all in place. Some of it is working, some isn't. But what it has done is it broken some of the difficult workarounds we've had in places. So part of the things you see in gross margin are some of the efficiencies that are coming out of the already, you know, partial expansions being completed and up and running. That's very helpful. Could you maybe comment on tool storage, specifically in the quarter neck?

Speaker Change: So they're all in place. Some of it is working, some isn't. But what it has done is it's broken some of the difficult workarounds we've had in the places. So part of the things you see in gross margin is some of the efficiencies that are coming out of the already partial expansions being completed and up and running.

Nicholas Pinchuk: Could you maybe come in on tool storage specifically in the quarter neck. We, you know, saw the benefit. I think already in the first quarter of you having the capacity in place and in fluxing it like you just spoke to, did, you know, did the growth continue in the second quarter? No, the product line, every product line in this quarter was more balanced. Every product line was down some in the quarter and big ticket. You saw the originations. I think the originations were down more. Regenations, you know, which is a surrogate for big tools for big ticket sales and a longer payback sales, was down more than the tools group was down in the quarter.

Speaker Change: That's very helpful.

Nicholas T. Pinchuk: We saw the benefit, I think, already in the first quarter of you having the capacity in place and flexing it as you just spoke. Did the growth continue in the second quarter? No.

Speaker Change: Could you maybe comment on tool storage specifically in the quarter neck? We, you know, saw the benefit, I think, already in the first quarter of you having the capacity in place and flexing it like you just spoke to did, you know, did the growth continue in the second quarter?

Nicholas T. Pinchuk: The product line, every product line in this quarter was more balanced. Every product line was down some in the quarter. And big ticket, you saw the originations.

Speaker Change: Every product line in this quarter was more balanced. Every product line was down some in the quarter and big ticket. You saw the originations. I think originations were down more.

Nicholas T. Pinchuk: I think originations were down more. Originations, which is a surrogate for big ticket sales and the longer payback sales, was down more than the tools group was down in the quarter. So the big ticket items were a smaller percentage of that. Now, that was lead.

Speaker Change: Originations, which is a surrogate for big ticket sales

Speaker Change: longer payback sales was down more than the tools group was down in our quarter... So the big ticket items were a smaller percentages. Now that was lead...

Nicholas Pinchuk: So the big ticket items were a smaller percentage of that. Now that was led. Diagnostic was probably the big player in that because diagnosis was comparing to a launch of the Solace Plus last, you know, set quarter last year. So a non-launch quarter has, you know, you can have different comparisons with that in this quarter like this with a launch quarter.

Nicholas T. Pinchuk: Diagnostics was probably the big player in that because diagnostics was comparing to a launch of the Solus Plus last, you know, second quarter of last year. So a non-launch quarter has, you know, you can have different comparisons with that in this quarter like this with a launch quarter. But generally, tool storage, if you're talking about the efficacy of tool storage, one of the things this is doing is it's allowing us to sell and pivot to provide people with the accessories, the benches, the carts that technicians are more receptive to in this situation. So that will benefit us. You know, it's a question of how quickly we can get that burned into the Algona production process.

Speaker Change: Diagnostics was probably the big player in that because diagnostics was comparing to a launch of the Solus Plus.

Speaker Change: last the, you know, sub-quarter last year. A non-launched quarter has, you know, you can have different comparisons with that in a quarter like this with a launch quarter.

Nicholas Pinchuk: But generally, tool storage, if you're talking about the efficacy of tool storage, one of the things this is doing is allowing us to sell and pivot to provide people the accessories, the benches, the cards that technicians are more receptive to in this situation. So that will accrue to us. You know, it's a question of how quickly we can get that burned in to the Algona production process. It's working a little bit now, but in the quarter, technician uncertainty, I think, was a little higher in this quarter. So you probably like you might see the conditions are a little more uncertain.

Speaker Change: But generally, tool storage, if you're talking about the efficacy of tool storage, one of the things this is doing is allowing us to sell and pivot to provide people the accessories

Speaker Change: the benches, the carts that technicians are more receptive to in this situation.

Nicholas T. Pinchuk: It's working a little bit now, but in the quarter, technician uncertainty, I think, was a little higher this quarter. So, as you might see, the conditions are a little more uncertain. And then lastly, just, you know, given the uncertainty in terms of, you know, techs right now, do you meter or change your approach to the SFC at all this year, just in terms of promotions and positioning? And could it be maybe a venue to refine your approach in this more unsettled environment kind of exiting this year into 25? Yeah, I mean, the thing is, yeah, not the look, not the overall thing.

Speaker Change: So that will accrue to us. You know, it's a question of how quickly we can get that...

Speaker Change: that burned into the Algona production process.

Speaker Change: It's working a little bit now, but in the quarter, technician uncertainty, I think, was a little higher this quarter, so like you might see, the conditions are a little more uncertain. And so I think big ticket was down again.

Nicholas Pinchuk: And so I think Big Ticket was down again.

Nicholas Pinchuk: And then lastly just you know given on certainty in terms of you know tax right now do you meter or change your approach to the SFC at all this year just in terms of promotions and positioning and could it be maybe a venue to refine your approach in this more unsettled environment kind of exiting this year into 25 think. Yeah, I mean the thing is not the overall thing. The overall thing is the tech. The SFC is three purposes, you know, maybe four. One is to have a training seminar. We're going to train the heck out of things you know, things we think need train. Some of those are smaller ticket diagnostic units; some of them are some of them are handles and so on.

Speaker Change: And then lastly, just, you know, given the uncertainty in terms of, you know, techs right now, do you...

Speaker Change: Meet or change your approach to the SFC at all this year, just in terms of promotions and positioning, and could it be maybe a venue to refine your approach in this more unsettled environment, kind of exiting this year into 25, I think?

Nick: Yeah, I mean, the thing is, yeah, not the, look, not the overall thing. The overall thing is the tech, the SFC is three purposes.

Nicholas T. Pinchuk: The overall thing is the techs, the SFC is three per, You know, maybe four. One is to have a training seminar. We're going to train the heck out of things, you know, things we think need training. Some of those are smaller ticket diagnostic units. Some of them are hand tools and so on.

Nick: You know, maybe four.

Nick: One is to have a training seminar. We're going to train the heck out of things, you know, things we think we need to train.

Nicholas T. Pinchuk: So we're working on those things in the SFC. We're going to continue that because, like I said, we want to be at full strength and fully loaded when we come out of this difficulty with the tool group and our network. And then we have kind of a, you know, a tool show, which is several football fields, and you want to let people touch the tools.

Nick: Some of those are smaller ticket diagnostic units, some of them are hand tools and so on. So we're working on those things in the SFC. We're going to continue that because we're going to continue to support. Like I said, we want to be at full strength and fully loaded when we come out of this difficulty with the tools group and our network.

Nicholas Pinchuk: So we're working on those things in the SFC. We're going to continue that because we're going to continue to support, like I said, we want to be a fully loaded when we only come out of this difficulty with the tools group in our network. And then we have kind of, you know, a tool show which is several football fields, and you want to let the people touch the tools. And that's where we'll have some change because we'll be trying to emphasize the quicker payback items, which we think that technicians want. For example, for one of the warm up promotions for the.

Nick: And then we have kind of a, you know, a tool show, which is several football fields, and you want to let the people touch the tools, and that's where we'll have some change, because we'll be...

Nicholas T. Pinchuk: And that's where we'll have some change because we'll be trying to emphasize the quicker payback items, which we think that technicians want. For example, one of the warm-up promotions for the SFC was the Super 7, which was filled with hand tools, wrenches, ratchets, hammers, and torque units. And it did go pretty well, you know. It did get subscribed to almost as a sellout.

Nick: trying to emphasize the quicker payback items, which we think

Nicholas Pinchuk: For the ffc was the super seven, which is filled with the hand tools, ranches, and ratchets, and hammers, and torque units, and it didn't go pretty well; you know it didn't get. Subscribed almost as a sellout, so we’re going to try to push in that situation. So we’ll be trying to emphasize, by physical presentation and by verbal urging, the idea of the quicker payback items, not completely. Selecting tool storage or diagnostic in that situation and then you know the other thing about the about the SFC's you need the SFC I think because you don't touch your franchise that often and we all want to give them a message and can and you know reinforce that they have enlisted their economic future with a strong and robust business called Snapper.

Nick: that technicians want. For example, one of the warm-up promotions for the for the SFC was the Super 7, which is filled with the hand tools, wrenches and ratchets and hammers and...

Nicholas T. Pinchuk: So we're going to try to push in that situation. So we'll be trying to emphasize by physical presentation and by verbal urging the idea of quicker payback items, not completely neglecting tool storage or diagnostics in that situation. And then, you know, the other thing about the SFC is that you need the SFC, I think, because you don't touch your franchisees that often.

Nick: and Torque Units, and it did go pretty well, you know, it did get...

Nick: Subscribe almost as a sellout. So, we're going to try to push in that situation, so we'll be trying to emphasize.

Nick: by physical presentation.

Nick: and by verbal urging.

Nick: The idea of quicker payback items, not completely neglecting tool storage or diagnostics in that situation.

Speaker Change: And then, you know, the other thing about the, about the SFCs, you need the SFC, I think, because you don't touch your franchisees that often, and we all want to give them a message and can, and you know, reinforce that they have enlisted their economic future with a strong and robust business called Snap-On.

Nicholas T. Pinchuk: And we all want to give them a message and, you know, reinforce that they have enlisted their economic future with a strong and robust business quality. I'll leave it there. Thank you. And our next question will come from Bret Jordan with Jeffries. Please go ahead. Hey, good morning guys. This is Patrick Buckley on for Brett.

Operator: I'll leave it there. Thank you.

Bret Jordan: And our next question will come from Brett Jordan with Jeffries. Please go ahead.

Speaker Change: And our next question will come from Bret Jordan with Jefferies. Please go ahead. Hey, good morning guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. Morning.

Patrick Buckley: Hey, good morning, guys. This is Patrick Buckley on for Brett. Thanks for taking our questions. I'm Ars and I could you talk a bit more on the dispersion between the OEM dealer customers and the independents. Is that independent chop softest similar to what you're seeing in the tools group just just more cautious. Just giving the backdrop, or there's something else.

Patrick Neil Buckley: Thanks for taking our questions. Unknown Speaker On RS&I, could you talk a bit more on the dispersion between the OEM dealer customers and the independents? Is that independent shop softest similar to what you're seeing in the tools group? Just more cautious, given the backdrop? Or is there something else?

Speaker Change: On RS&I, could you talk a bit more on the dispersion between the OEM dealer customers and the independents? Is that independent shop softness similar to what you're seeing in the tools group? Just more cautious, given the backdrop, or is there something else out there? Well, remember that...

Nicholas T. Pinchuk: Unknown Speaker Well, they should remember that. That's it. Characterization. We are strong in the dealerships because the OEM programs have been strong. You know, the change, the idea, that was the purpose of the Lyft discussion with the EV, is that really the OEMs are calibrating up, raising their game to match the different drivetrains and more autonomy, and the OEMs are launching programs to do that, and either associated with new models or new capabilities, like those demonstrated in the Lyft.

Nicholas Pinchuk: Well remember that that's that's characterization we are strong in the dealerships because the OEM programs have been strong in order to change the idea that was the purpose of the list discussion with the EV is that really the OEMs are calibrating up are raising their game to match the different drive trains and the more economy. And the OEMs are launching programs to do that and either are either associated with new models and new capabilities like demonstrated a list. So you see that, and that is marking that business grew again high single digits in the quarter.

Speaker Change: That's it. That's it.

Speaker Change: Characterization. We are strong in the dealerships because the OEM programs have been strong.

Speaker Change: You know, the change, the idea, that was the purpose of the Lyft discussion with the EV.

Speaker Change: is that really the OEMs are calibrating up, are raising their game to match the different drivetrains and the more autonomy, and the OEMs are launching programs to do that, and either associated with new models and new capabilities like demonstrated in the list. So you see that, and that is marking. That business grew again, high single digits in the quarter.

Nicholas T. Pinchuk: So you see that, and that is marking. That business grew again, high single digits in the quarter. So that is bowed, is underpinning that. And also, it's around the, you know, some of the software in that business with our electronic parts catalogs. Now if you pivot, it's a little more complicated situation with the independent because flowing through RS&I is the diagnostics.

Nicholas Pinchuk: So that is bowing is underpinning that and also it's around the you know some of the software in that business with our with our electronic parts catalogs.

Speaker Change: So that is Boeing is underpinning that and also it's around the, you know, some of the software in that business with our, with our electronic parts catalogs.

Nicholas Pinchuk: Now if you pivot, it's a little more complicated situation with the independence because flowing through RSNI is the diagnostics. They have the diagnostics division because of its dependence on the information basis, which are integral to other RSNI products. So diagnostics was like big ticket was down in the tools group, so that drag down some of the RSNI volume. If you look at RSNI and CNI, both sell to the tools group, power tools and CNI diagnostics and RSNI. If you look at them, they were up, I think the number was 1% organically at RSNI, 1.2% organically in CNI. But if you looked at it externally.

Speaker Change: Now, if you pivot, it's a little more complicated situation.

Speaker Change: with the independent, because flowing through RS&I is the diagnostics, they have the diagnostics division because of its dependence on the information basis, which are integral to other RS&I products. So diagnostics was, like Big Ticket, was down in the tools group. So that dragged down some of the...

Nicholas T. Pinchuk: They had the diagnostics division because of its dependence on the information basis, which is integral to other RS&I products. So diagnostics was like a big ticket item, was down in the tools group. So that dragged down some of the... RS&I volume. If you look at RS&I and C&I, both sell to the tools group. Power Tools in C&I, Diagnostics in RS&I, and if you look at them, they were up, I think the number was 1% organically in RS&I, 1.2% organically in C&I, but if you looked at them externally, excluding sales to the tools group, internal sales, C&I was up 3.9% organically, and ours and I were up over 4%. And so it isn't We describe it that way based on the efficacy of the actual reported numbers.

Speaker Change: The RS&I volume. If you look at RS&I, RS&I and C&I both sell to the tools group, power tools in C&I, diagnostics in RS&I, and if you look at them, they were up, I think the number was 1% organically in RS&I, 1.2% organically in C&I, but if you looked at them externally,

Nicholas Pinchuk: We, excluding sales to the tools group, internal sales, the C and I, was up 3.9% organically, and RSNI was up over 4%. And so it isn't; you know, the little more complicated description of that. We've described it that way based on the efficacy of the actual reported numbers. So, we do see some progress in independent shops, particularly with our direct sales business. You see, one of the things that is happening in RSNI, coming out in RSNI, is that when we can get up and sell directly to the customer with our, I think, really strong product line involved, we do pretty well.

Speaker Change: Excluding sales to the tools group, internal sales, CNI was up 3.9% organically, and RS&I was up over 4%.

Speaker Change: And so, it isn't, you know, it's a little more complicated description of that. We've described it that way based on the efficacy of the actual reported numbers. So, we do see some progress in independent shops, particularly with our direct sales businesses.

Nicholas T. Pinchuk: So we do see some progress in independent shops, particularly with our direct sales. You see, one of the things that are happening in RS&I, and coming out of RS&I, is that when we can get up and sell directly to the customer with our, I think, really strong product line abroad, we do pretty well. We're still doing pretty well, but a part of that business goes through distributors. And when they go through distributors, we're seeing a pull-off of that business. We saw it particularly in some of the RS&I businesses. So I don't think it's the independent shops.

Speaker Change: You see, one of the things that is happening...

Speaker Change: In RS&I, coming out in RS&I, is that when we can get up and sell directly to the customer with our, I think, really strong product line, we do pretty well. We're still doing pretty well. But a part of that business goes to distributors.

Nicholas Pinchuk: We're still doing pretty well, but a part of that business goes through distributors. And when they go through distributors, we're seeing a pull-off of that business. We saw it particularly in some of the RSNI businesses. So I don't think it's the independent shops. I think it is the distributors themselves, or maybe a little white knuckle at this time, and maybe taken down some of the inventory. Some of those distributors.

Speaker Change: And when they go through distributors, we're seeing a pull-off of that business. We saw it particularly in some of the RS&I businesses. So I don't think it's the independent shops. I think it is the distributors themselves or maybe getting a little white-knuckled at this time and maybe taking down some of their inventories.

Nicholas T. Pinchuk: I think it is the distributors themselves who are maybe getting a little white-knuckled at this time and maybe taking down some of their inventories, some of those distributors. So you're seeing that over here. It's kind of a complicated problem.

Nicholas Pinchuk: So you see in that overlay, it's kind of a complicated, complicated, but only summarized. We're doing pretty well with the dealerships. We're doing well, selling to direct independent shops, which means they're doing pretty well. They're doing their still robust. But the intermediaries are a little bit more reluctant. Got it. That's helpful.

Nicholas T. Pinchuk: Let me summarize. We're doing pretty well with the dealerships. We're doing well selling to direct independent shops, which means they're doing pretty well. They're still robust, but the intermediaries are a little bit more reluctant. Got it, that's helpful.

Speaker Change: Some of those distributors, so you're seeing that over here. It's kind of a complicated Complicated, but let me summarize. We're doing pretty well with the dealerships. We're doing well selling to direct independent shops Which means they're doing pretty well. They're doing they're still robust, but the end of the intermediaries a little bit more

Nicholas T. Pinchuk: And then within the tools group, could you talk about how pricing compared to units during the quarter or maybe just additional color around how successful these lower payback items are and improving volumes and how that mix is affecting things? Well, the price for units is a lot lower, huh? You know, so you have to sell a lot more wrenches to make up for the tool storage box. That's pretty important. And that can weigh on your volume.

Nicholas Pinchuk: And then within the tools group, could you talk about how pricing compared to units during the quarter, or maybe just additional color around how successful these lower payback items are, and improving volumes, and how that mix is affecting things? Well, the price for units a lot lower, huh? You know, so you've got to sell a lot more wrenches to make up for a tool storage box. That's pretty important. I can weigh on your volume, but I would offer to you, you need to look no further than gross margin. Gross margin down 20 basis points with a, what was it?

Speaker Change: Got it. That's helpful. And then within the tools group, could you talk about how pricing compared to units during the quarter or maybe just additional color around how successful these lower payback items are and improving volumes and how that mixes affecting things?

Speaker Change: Well, the price for units a lot lower, huh? You know, so you got to sell a lot more wrenches to make up for a tool storage box. That's pretty important. And that can weigh on your volume. But I would offer to you

Nicholas T. Pinchuk: But I would offer to, You need look no further, then Gross Margin, close margin down 20 basis points, with a, what was it, 7.7% organic sales decline. Roll to margin now, 20 babies a point. How does he think that happened?

Speaker Change: You need look no further.

Speaker Change: Than gross margin.

Speaker Change: Post-margin down 20 basis points.

Nicholas Pinchuk: 7.7 percent organic sales down? Gross margin down 20 basis points. How does he think that happens? Well, it happens because the new tools you bring out, the new wrenches, you know, the new tools we're bringing out; they are selling at good margins. That doesn't mean we're pricing the existing businesses, but a lot of these new tools, and a lot of them are rolling out. We've got wrenches and ratchets and extensions and adapters, and things that are specially made like the E-series and the Super-Duty trucks we talked about. People are willing to pay big premiums for that kind of stuff, and it's playing out in the gross margin.

Speaker Change: with a, what was it, 7.7% organic sales down.

Nicholas T. Pinchuk: Well, it happens because the new tools you bring in. The new wrenches, you know, the new tools we're bringing out, they sell at good margins. That doesn't mean we're pricing the existing businesses, but a lot of these new tools, and a lot of them are rolling out. We have wrenches and ratchets and extensions and adapters and things that are specially made like the E-Series and the Super Duty trucks we talked about.

Speaker Change: Roll to margin now, 20 Beagless points.

Speaker Change: How does he think that happened? Well, it happens because the new tools you bring out, the new wrenches, you know, the new tools we're bringing out.

Speaker Change: They are selling at good margins.

Speaker Change: That doesn't mean we're pricing the existing businesses, but a lot of these new tools and a lot of them are rolling out. We've got wrenches and ratchets and extensions and adapters and things that are specially made like the E-Series and the Super Duty trucks we talked about. People are willing to pay big premiums for that kind of stuff and it's playing out in the gross margins.

Nicholas T. Pinchuk: People are willing to pay big premiums for that kind of stuff, and it's playing out in the gross margins. Part of the story about the tools group is that we held the margins pretty well. And we kept spending at lower volumes; we didn't back off from the SG&A supporting the franchisees. So, in effect, we could have blunted the volume even more if we didn't want to, if we didn't believe that the sun was coming out again and we wanted to be at full strength. So those are the bounces.

Nicholas Pinchuk: Part of the story about the tools group is we held the margins pretty well, and we kept spending at lower volumes. We didn't back off of the S-G-N-A supporting the franchisees. So, in effect, we could have blunted the volume even more if we didn't want to, if we didn't believe that the stun is coming out again, and we want to be at full strength. So those are the bounces. Gross margin is a big set. If you look at the gross margin overall of the corporation, C and I is up 220 basis points. The R and I is up 50 basis points.

Speaker Change: Part of the story about the tools group is...

Speaker Change: We held the margins pretty well, and we kept spending at lower volumes. We didn't back off.

Speaker Change: of the SG&A supporting the franchisees.

Speaker Change: So, in effect, we could have blunted the volume even more if we didn't want to.

Speaker Change: If we didn't believe that the sun is coming out again, and we want to be at full strength. So those are the balances. Gross margin is a big success. If you look at the gross margin overall of the corporation...

Nicholas T. Pinchuk: Gross margin is a big success. If you look at the gross margin overall of the corporation, CNI is up 220 basis points, RS&I is up 50 basis points, and the overall corporation is 50.6%, only down 10 basis points. So what you're seeing in our financials is that we're still, we're still pretty robust. That's why I love the idea of CNI and RS&I stepping up the turbulence of the tools group. Because if you look at the overall business, you say, hey, this business at the gross margin level looks pretty healthy. Great, that's all for us. Thanks, guys. And our next question will come from Gary Prestopino with Barrington Research. Please go ahead.

Speaker Change: C&I is up 220 basis points, the RS&I is up 50 basis points, the overall corporation is 50.6%, only down 10 basis points.

Nicholas Pinchuk: The overall corporation is 50.6%, only down 10 basis points. So what you're seeing in our financials are, boy, we're still pretty robust. That's why I love the idea of C and I and R and I bowing up the turbulence of the tools group, because if you look at the overall business, you say, hey, this business at the gross margin level looks pretty healthy.

Speaker Change: So what you're seeing in our financials are, boy, we're still pretty robust. That's why I love the idea of C&I and RS&I buoying up the turbulence of the tools group. Because if you look at the overall business, you say, hey, you know, this business at the gross margin level looks pretty healthy.

Operator: Great, that's all for us.

Operator: Thanks, guys.

Gary Prestopino: And our next question will come from Gary Prestopino with Burrington Research. Please go ahead. Hey, good morning, everyone. Just wanted to address the corporate expenses look like they were down, and I would assume that's the impact of the legal settlement, right? Yes, except down, I don't know, like, what, 18 million or something like that? Maybe it can change?

Speaker Change: Great, that's all for us. Thanks, guys.

Speaker Change: And our next question will come from Gary Prestopino with Barrington Research. Please go ahead.

Gary Frank Prestopino: Hey, good morning, everyone, just wanted to address the corporate expenses look like they were down. And I would assume that's the impact of the legal settlement, right? Yes. Unknown Speaker Except I don't know like what 18 million or something like that might change. Okay, this pains me to tell you, it pains me dearly.

Gary Frank Prestopino: Hey, good morning, everyone.

Gary Frank Prestopino: Just wanted to address the corporate expenses look like they were down and I would assume that's the impact of the legal settlement, right? Yes.

Speaker Change: Unknown Speaker Except, I don't know, like what, 18 million or something like that? Maybe 18 and change? Okay, this pains me to tell you this, Gary.

Aldo Pagliari: Okay, this pains me to tell you this. It pains me, dearly. You've got 11.2 million, I think, for the legal settlement. And you've got 7 million in change for reduced management stock-based compensation and bonuses estimated for the yield.

Nicholas T. Pinchuk: You got 11.2 million, I think, for the legal settlement, and you got 7 million in change for reducing.., management. Unknown Speaker, Unknown Speaker, Unknown Attendee, Unknown Speaker, Unknown Speaker, So it hurts me to tell you that on this call, but in fact, that's right. I could also see the stock comp was down, and I guess what I'm getting at is that, looking forward in the back [inaudible] Okay. All right.

Speaker Change: Pains me dearly. Because you've got $11.2 million, I think, for the legal settlement. And then you got $7 million and change for reduced...

Speaker Change: management, stock-based compensation, and bonuses

Aldo Pagliari: So it hurts me to tell you that on this call, but in fact, that's a different in this quarter. All right, and I could also see the stock comp was down. And I guess what I'm getting at is that looking forward in the back half of the year, should it be something without the impact of any legal settlement? Should it be somewhere between 20 and 25 million a quarter? I'd more to top into that. I would think more to top into that, actually. Okay, all right. That's fine. That's what I think.

Gary Frank Prestopino: So, it hurts me to tell you that on this call, but in fact, that's the difference.

Gary Frank Prestopino: In this quarter.

Speaker Change: Looking forward in the back half of the year, should it be, without the impact of any legal settlement, should it be somewhere between $20 and $25 million a quarter? More at the top end of that. I would think more at the top end of that, actually. Okay. All right. That's what I think.

Nicholas Pinchuk: You know, the other question I want to ask you is, you know, quite obvious that there's a slow down here and the buying of diagnostic equipment. Some of it deals with the fact that you just had a great year last year. But when does it get to the point where the technician or the shop starts falling behind, if ever? That occurs, really, with not upgrading their diagnostic product. And my understanding is that with these products, it really speeds up your production, you know, a point being able to repair cars. So does that start coming in the play here as we work deeper into this?

Nicholas T. Pinchuk: Um, the other question I want to ask you is, um, quite obvious that there's a slowdown here in the buying of diagnostic equipment. Some of it deals with the fact that you just had a great year last year. But when does it get to the point where the technician or the shop, Unknown Attendee, Scott Stember, Unknown Attendee, David MacGregor, Sherif Abdul, Patrick Buckley, One, I hate to say the comparison, but it is true that we launched a new product last second quarter and you're comparing against that. But you also have the technician's clear aversion to bigger ticket items at this point. They're less likely; you can see it in the originations.

Speaker Change: The other question I want to ask you is.

Speaker Change: quite obvious that there's a slowdown here in the buying of diagnostic equipment. Some of it deals with the fact that you just had a great year last year. But when does it get to the point where the technician or the shop

Speaker Change: starts falling behind, if ever, if that occurs, really, with not upgrading.

Speaker Change: their diagnostic product. And my understanding is that

Speaker Change: with these products, it really speeds up your production, you know, being able to repair cars. So does that does that start coming into play here as we work deeper into this? Sure, it does. I think I think I think this is the thing. I think you got two things going on.

Nicholas Pinchuk: Sure, it does. I think this is a thing. I think you got two things going on. One, I hate to say the comparison, but it is true that we launched a new product last second year, and you're comparing against that. But you also have the technician's clear aversion for bigger ticket items at this point. They don't want it there. They're less likely. You can hear the need, and then broadly in the originations. You know, they're gravitating toward other things.

Speaker Change: One, I hate to say the comparison, but it is true that we launched a new product last second quarter and you're comparing against that.

Speaker Change: But you also have the technician's clear aversion.

Speaker Change: for bigger ticket items at this point.

Speaker Change: They're less likely, you can see it broadly in the originations.

Nicholas T. Pinchuk: You know, they're gravitating toward other things. I was with franchisees and garage owners in Syracuse and in Atlanta, and I had all the regional guys here, and I was visiting them for probably longer than they wanted to be, and they all said the same thing.

Nicholas Pinchuk: I was with franchisees and drive-owners in Syracuse and Atlanta, and I had all the regional guys in here, and I was wide-earned them for probably longer than they wanted to be questions. And they all said the same thing. People are starting, you know, they're just worried. There's a fear in the situation of where they're going. So they don't want to get embroiled in paying back over years as much. They're a little more conservative about them. They're not probably in, and they're spending. So you see that, but your overarching point is quite true. Eventually, people have to say, "people do say, boy," and it's like this.

Speaker Change: You know, they're gravitating toward other things. I was with franchisees and garage owners in Syracuse and in Atlanta, and I had all the regional guys in here, and I was voddiering them for probably longer than they wanted to be questioned.

Nicholas T. Pinchuk: People are starting to, you know, they're just worried. There's a fear in the situation of where they're going. So they don't want to get embroiled and pay back over years as much.

Speaker Change: And they all said the same thing.

Speaker Change: People are starting to, you know, they're just worried. There's a fear in the situation of where they're going. So they don't want to get embroiled and pay them back over years as much. They're a little more conservative about that. They're not propagating their spending. So you see that. But your overarching point is quite true. Eventually,

Nicholas T. Pinchuk: They're a little more conservative about that. They're not profiting from their spending. So you see that. But your overarching point is quite true. Eventually, people have to say, people do say, boy, and it's like this, you know, you could fix a car by listening to it. Now you have to look at the trouble codes and try to discern what the trouble codes mean and then try to fix it. That's what scanners do. They tell you what the trouble codes are.

Speaker Change: People have to say, people do say, boy, and it's like this.

Nicholas Pinchuk: You know, you can, the car nowadays, you used to be able to fix a car by sound. Now you have to look at the; mostly people have to look at the trouble codes and try to discern what the trouble codes mean and then try to fix it. That's what canors do. They tell you what the trouble codes are. Those are the simpler and competitive diagnostic units. But ours, when we confirmed in the legal settlement, we have a proprietary database that will take those data points, those data points, those trouble codes and decode them, telling you what's actually wrong with the car.

Speaker Change: You know, you could, the car nowadays, you used to be able to fix a car by sound. Now you have to look at the, mostly people have to look at the trouble codes and try to discern what the trouble codes mean and then try to fix it. That's what scanners do. They tell you what the trouble codes are. Those are the simpler and competitive diagnostic units.

Nicholas T. Pinchuk: Those are the simpler and competitive diagnostic units. But ours, what we confirmed in the legal settlement, we have a proprietary database that will take those data points, those trouble codes, and decode them, telling you what's actually wrong with the car. Right now, the previous data, if you can only scan, you have to figure that out for yourself.

Speaker Change: but ours, what we confirmed in the legal settlement, we have a proprietary database that will take those, those, those data points, those data points, those trouble codes, and decode them, telling you what's actually wrong with the car.

Nicholas Pinchuk: Right now, the previous set, if you can only scan, you have to figure that out for yourself. Our database will put you right on target. So, eventually, as the cars go up in complexity, people aren't going to be able to, just like they haven't been able to read me now; they're not able to even get an idea about the car, even start without knowing what the trouble cost made. In the future, they're going to have to be able to decode the trouble cost because it's going to get even more complex, and you see that weighing on the situation.

Nicholas T. Pinchuk: So, eventually, as the cars go up in complexity, people aren't going to be able to, just like they haven't been able to read now, they're not able to get an idea about the car, even start it without knowing what the trouble code is. In the future, they're going to have to be able to decode the trouble codes because it's going to get even more complex.

Speaker Change: Right now, the previous data, if you can only scan, you have to figure that out for yourself. Our database will put you right on target. So, eventually, as the cars go up in complexity, people aren't going to be able to, just like they haven't been able to read now, they're not able to read the.

Speaker Change: ? udah... maybe about the car and start without knowing what the trouble code is. In the future, they'll have to be able to decode the trouble code. It's gonna get even more complex. And you see that weighing on the situation and so we expect that all...

Nicholas T. Pinchuk: And you see that weighing on the situation. And so, we expect that to all. Unknown Speaker, Unknown Interviewee, Unknown Interviewee, Unknown Interviewee, Unknown, Part of the reason why the Toon Scoop was able to hold its margins is because its software content is moving up. So people value it, but eventually they're going to want new hardware. Okay, thank you. And our next question will come from David MacGregor with Longbow Research. Please go ahead.

Operator: And so, we expect that to all figure out, that will come out in the next, you know, over the next period. We'll be launching new diagnostics, which will have new hardware, and our software keeps getting better. Now, one of the things we do see, Gary, is supporting your point: people who have diagnostics really fall in love with them, and so they want to update their software. Our subscriptions are going up. Part of the reason why the two of us was able to hold its margins is because its software content is moving upwards. So, people value it, but eventually, they're going to want new hardware.

Speaker Change: Figure out that all come out in the next you know the next

Gary Frank Prestopino: You know, over the next period, you know, we'll be launching new diagnostics, which will have new hardware, and our software keeps getting better. Now, one of the things we do see, Gary, is supporting your point, is people who have diagnostics really fall in love with them, and so they want to update their software. Our subscriptions are going up.

Gary Frank Prestopino: Part of the reason why the tools group was able to hold its margins is because its software content is moving upwards. So people value it, but eventually they're going to want new hardware.

Gary Frank Prestopino: Okay, thank you.

David Macgregor: In our next question, we'll come from David McGregor with Longbow Research. Please go ahead. Good morning, everyone, and thanks for taking the questions. Hey, good morning, Nick. Hey, let me just ask you about sort of the second half and expectations here.

Gary Frank Prestopino: And our next question will come from David MacGregor with Longbow Research. Please go ahead.

David Sutherland MacGregor: Good morning, everyone, and thanks for taking the questions. Hey, good morning, Nick. Hey, let me just ask you about sort of the second half and expectations here. I mean, given second quarter negative organic growth and Snap-On. Does that suggest...

David Sutherland MacGregor: Good morning, everyone, and thanks for taking the questions.

David Sutherland MacGregor: Hey, good morning, Nick. Hey, let me just ask you about...

David Macgregor: I mean, given second quarter, negative organic growth and Snap-on tools, does that suggest a second half growth should be negative as well? And I mean, 2K was not a challenging compare, and so I guess I'm just wondering how much forward visibility you have given the truck inventory levels and pre-SFC order growth? Well, I don't know. I think I wouldn't have said that Q2, Q2 last year; you're right. On the year-over-year basis, if you just look at year-over-year, Q2 last year was down. You know, it wasn't down; it wasn't perfect, let's say. So, it wasn't in that space; it wasn't as strong.

David Sutherland MacGregor: So the second half and expectations here, I mean, given second quarter negative organic growth and Snap-On tools.

Nicholas T. Pinchuk: The second half growth should be negative as well, and I mean 2Q was not a challenging compare, and so I guess I'm just wondering how much forward visibility you have. [inaudible] I don't know. I think, I think, I wouldn't have said that Q2 last year, you're right, on a year-over-year basis, if you just look at year-over-year, Q2 last year was It wasn't down, but it was stupid, let's say.

Speaker Change: Does that suggest the second half growth should be negative as well? And, I mean, 2Q was not a challenging compare, so I guess I'm just wondering how much forward visibility you have, given the truck inventory levels and pre-SFC order growth.

Speaker Change: Well.

Speaker Change: I don't know, I think, I think...

Speaker Change: I wouldn't have said that Q2 last year, you're right, on a year-over-year basis, if you just look at year-over-year, Q2 last year,

Nicholas T. Pinchuk: So in that space, it wasn't as strong. But if you look sequentially, the movement between the first quarter and the second quarter isn't that much different last year versus this year. So it's not so inconsistent. It isn't like that's a big difference.

Speaker Change: was down. It wasn't down, but it was tepid, let's say. So in that space, it wasn't as strong. But if you look back, if you look sequentially, the movement between the first quarter and the second quarter isn't that much different in last year versus this year.

Nicholas Pinchuk: But if you look back, if you look sequentially, the movement between the first quarter and the second quarter isn't that much different in last year versus this year. You know, it's not so inconsistent. It isn't like that's a big difference.

Nicholas T. Pinchuk: If you're talking about the second half, Boy, there are a lot of things going on. One is that for some time, so it's hard to judge what the second half will be like. You're not gonna get me to say that it'll be negative in the second half because we have plans, we think, that will overcome that. And for some time now, for several quarters, the sales off the VAT have been bigger than the sales to them on a year-over-year basis.

Speaker Change: It's not so inconsistent. It isn't like that's a big difference. If you're talking about the second half,

Nicholas Pinchuk: If you're talking about the second half, boy, there's a lot of things going on. One is that for some time. So, it's hard to judge what the second half would be like. You're not going to get me to say that it'll be negative in the second half, because we have plans; we think, provide some overcoming to that. And for some time now, for several quarters, the sales off the van have been bigger than the sales to the van on a year-over-year basis. Now, we saw some of that change toward the end of the quarter. And so, does anybody think, if you look at the uncertainty in the world, that it's less uncertain today, or it's the same today as it was, say, three months ago?

Speaker Change: Boy, there's a lot of things going on. One is that for some time, so it's hard, it's hard to judge what the second half would be like, you're not going to get me to say that it'll be negative in the second half, because we have plans, we think provide some overcoming to that.

Speaker Change: And for some time now, for several quarters, the sales off the van...

Speaker Change: have been bigger than the sails to the man.

Nicholas T. Pinchuk: Now, we saw some of that change toward the end of the quarter, so I don't know where it's going to go. If you want to look at it, I would say when you look at it from an operational point of view, you think sooner or later this is going to have to play out more positively. But then, when you look at uncertainty, your guess is as good as mine about how the uncertainty is going to play out.

Speaker Change: on a year-over-year basis. Now, we saw some of that change toward the end of the quarter, so I don't know where it's going to go. If you want to look at it, so from a, I would say when you look at it from an operational point of view, you know, you think.

Speaker Change: Sooner or later, this is going to have to play out more positively.

Speaker Change: But then when you look at uncertainty, your guess is as good as mine.

Nicholas T. Pinchuk: It seems to me as though, like I said in my remarks, the hits just keep on coming. And so does anybody think, if you look at the uncertainty in the world, that it's less uncertain or the same today as it was, say, three months ago? I don't think so.

Speaker Change: about how the uncertainty is going to play out. It seems to me as though, like I said in my remarks, the hits just keep on coming. And so, does anybody think, if you look at the uncertainty in the world, that it's less uncertain or it's the same today as it was, say, three months ago? I don't think so.

Nicholas Pinchuk: I don't think so. And so you hear that out of the technicians. I don't know where it's going in the third quarter of the fourth quarter. It's hard to say. But I think there's some positives that would mitigate toward positivity. The things we're doing, the product we're bringing out, the pivots we're making. But on the other hand, if you look at the macros, it's a black hole. You don't know; it's very opaque. So you're guessing as good as mine in that situation. All I know is, the only thing I think control is to try to do the pivots.

Nicholas T. Pinchuk: And so you hear that from the technicians. I don't know where it's going in the third quarter of the fourth quarter. It's hard to say.

Speaker Change: I don't think so. And so you hear that out of the technicians. I don't know where it's going in the third quarter or the fourth quarter. It's hard to say. But I think there's some positives that would mitigate toward positivity. The things we're doing, the product we're bringing out, the pivots we're making. But on the other hand, if you look at the macros...

Nicholas T. Pinchuk: But I think there are some positives that would mitigate toward positivity. The things we're doing, the product we're bringing out, the pivots we're making. But on the other hand, if you look at the macros, it's a black hole. You don't know. It's very opaque.

Nicholas T. Pinchuk: So, your guess is as good as mine in that situation. All I know is that the only thing I can control is to try to do the pivots, to try to match what the technicians say, and to take advantage of every opportunity we have. And the message of this quarter is that RS&I and CNI show that the model works in those places, and it can make a lot of money, and they provide good offsets.

Speaker Change: It's a black hole, you don't know, it's very opaque.

Speaker Change: So, your guess is as good as mine in that situation. All I know is, the only thing I can control is to try to do the pivots, to try to match what the technicians do.

Nicholas Pinchuk: To try to match what the technicians say and take advantage of every opportunity we have.

Nicholas Pinchuk: And the message of this quarter is that RS and I and CNI show that the model works in those places and I can make a lot of money, and they provide good offsets.

Speaker Change: and take advantage of every opportunity we have and the message of this quarter is is that RSNI and CNI show the model works in those places that can make a lot of money and they provide good offsets.

Nicholas Pinchuk: Nick, you operating expenses in the second quarter in the Snap-On Tool segment, the leverage. You characterize that mostly as volume related. I guess it sounds like you're about to lean more heavily into training and maybe advertising and promotions. And I'm just wondering how you expect an op-ex to continue the leverage. I don't know. My view of the second quarter, you may have a different view, that my view of the second quarter was, we didn't back off. We kept spending the same. We spent a little bit more. They continue doing that in the second half. So I'm not talking that I'm going to sally forth with a lot more expenses.

Nicholas T. Pinchuk: Nick, the operating expenses in the second quarter of the Snap-On tools segment de-leveraged, you characterize that mostly as volume related. I guess it sounds now like you're about to lean more heavily into, you know, training and advertising. Transcription by CastingWords, Unknown Speaker 000 I don't know.

Speaker Change: All right. Nick, the operating expenses in the second quarter in the Snap-On tools segment de-leveraged, you characterized that mostly as volume related. I guess it sounds now like you're about to lean more heavily into training and maybe advertising and promotions and...

Speaker Change: and I'm just wondering how you expect that OPEX to...

Nicholas T. Pinchuk: You know, I can have Unknown Speaker 0000 my view of the second quarter; you may have a different view of it. My view of the second quarter was that we didn't back off, we kept spending the same amount, we spent a little bit more.

Speaker Change: Continue deleveraging. I don't know. You know, in the second half. What happened, my view of the second quarter, you may have a different view of it. My view of the second quarter was we didn't back off. We kept spending the same. We spent a little bit more. So we didn't back off with more volumes. So I'm not talking that I'm going to sally forth with a lot more expenses.

Nicholas T. Pinchuk: Unknown Speaker 0000 So I'm not, I'm not, I'm not saying that I'm going to sally forth with a lot more expenses. Unknown Speaker 0000 but I'm holding the support. Now I'm holding the support. We're doing what we do, only we're adjusting it to match the current situation. I didn't mean my comments before that we were going to open the floodgates and spend a lot more. I didn't mean that. What I meant was I'm holding.

Nicholas Pinchuk: But I'm holding the support. Now I'm holding the support. We're doing what we do. Only we're adjusting it to match the current situation. I didn't mean my comments before that we're going to open the flood dates and spend a lot more. I didn't mean that. What I meant is I'm holding. Because I thought we're doing a pretty good job of supporting before. Now I think we held that in the second quarter. We'll probably do that again. But it will be a different array versus the match to the current environment.

Speaker Change: But I'm holding the support.

Speaker Change: I'm holding the support. We're doing what we do, only we're adjusting it to match the current situation. I didn't mean my comments before that we're going to open the plug gates and spend a lot more.

Nicholas T. Pinchuk: Because I thought we were doing a pretty good job of supporting before. Now I think we held that in the second quarter. We'll probably do that again, but it will be a different... Different array versus the, you know, match to the current environment.

Speaker Change: I didn't mean that. What I meant is I'm holding. Because I thought we were doing a pretty good job of supporting before. Now I think we held that in the second quarter. We'll probably do that again. But it will be a different...

Speaker Change: Different array versus the, you know, match to the current environment.

Nicholas T. Pinchuk: And then, can you just talk about the cadence within the quarter? You mentioned a moment ago in responding to a question that they... (inaudible) Unknown Speaker. Yeah, right. I was just going to get you to talk about Cain.

Nicholas Pinchuk: And then can you just talk about cadence within the quarter? You mentioned a moment ago in responding to the question that your trucks were destocking right up until late in the quarter. I just, yeah, right. I was going to get you to talk about cadence. Please go ahead. Well, the cadence was pretty; I think, consistent throughout the quarter. I think toward the end of the quarter, we had, you know, a less destocking events, you know, in the last month or so. So that's a positive. However, sometimes I'll tell you, David; sometimes that, well, sometimes that happens because it's the last month.

Speaker Change: And then can you just talk about cadence within the quarter? You mentioned a moment ago in responding to a question that your trucks were destocking right up until late in the quarter. Sure, I did, yeah, right.

Nicholas T. Pinchuk: Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES, consistent throughout the quarter. I think toward the end of the quarter, we had, you know, a fewer stocking events, you know, in the last month or so. So that's a positive. However, sometimes, I'll tell you, David, sometimes that all happens because it's the last month. So it's hard for me to interpret whether that's a last month phenomena that happens once in a while, not not uncommonly, but not all the time. And hasn't happened recently, but, but it did happen.

Speaker Change: I was just going to get you to talk about cadence.

Speaker Change #100: Please go ahead, sir. Well, the cadence was pretty...

Speaker Change #101: I think.

Speaker Change #101: consistent throughout the quarter. I think toward the end of the quarter, we had, you know, a less the stocking events, you know, in the last month or so. So that's a positive. However, sometimes, I'll tell you, David, sometimes that all sometimes that happens because it's the last month.

Nicholas Pinchuk: So it's hard for me to interpret whether that's a last month phenomenon that happens once, you know, once in a while, not uncommonly, but not all the time. It hasn't happened recently, but it did happen. So maybe that's a positive. It's hard for us to predict that out of the one month. But I think if you go back to the quarter, it was about the same levels, you know, relationship was a level except for them in L.M.

David Sutherland MacGregor: So it's hard for me to interpret whether that's a last month phenomena that happens, you know, once in a while, not uncommonly, but not all the time, and hasn't happened recently, but...

Nicholas T. Pinchuk: So maybe that's a positive. It's hard for us to predict out of the out of one month. But I think if you go back to the quarter, it was about the same level, you know, the relationship was [inaudible] No, it's too early, you know, and then you got too much stuff floating through July.

David Sutherland MacGregor: But it did happen. So maybe that's a positive. I it's hard for us to predict out of the out of the one month. But I think if you go back to the quarter, it was about the same level, you know, relationship was

Nicholas Pinchuk: And your early July experience wouldn't give you a framework for interpreting that. No, it's too early. You know, and then you got too much stuff floating through July. You know, somebody asked me, I have somebody asked me not not on a call, but asked me, well, are people pulling back in early July waiting for the SFC? And we did have a, you know, like I said, just a minute ago, we had the Super 7 program that rolled out and seemed to be pretty well received with this, you know, full array of hand tools. We gave him a great shotgun blast, the hand tools for this promotion.

Speaker Change #102: elles, except for that mail-in. And your early July experience wouldn't give you the framework for interpreting that?

Speaker Change #102: No.

Nicholas T. Pinchuk: You know, somebody asked me, somebody asked me, not on a call but asked me, well, are people pulling back in early July, waiting for the SFC or the respondent? We did have a, we did have a, you know, like I said just a minute ago, we had the Super 7 program that rolled out and seemed to be pretty well received with this, you know, a full array of hand tools. We gave them a great shotgun blast, the hand tools for this promotion, and that seemed to get enthusiasm up, and, you know, it was pretty close to expectation.

Speaker Change #103: It's too early, you know, and then you got too much stuff floating through July .

Speaker Change #104: You know, somebody asked me, somebody asked me, not on a call, but asked me, well, are people pulling back in early July , waiting for the SFC, are they responding?

Speaker Change #105: We did have a, we did have a, you know, like I said just a minute ago, we had the Super 7 program that rolled out and seemed to be pretty well received.

Speaker Change #105: with this, you know, a full array of hand tools. We gave them a great shotgun blast, the hand tools, for this promotion. And that seemed to get enthusiasm up.

Nicholas Pinchuk: And that seems to get enthusiasm up. And, you know, it's pretty close to the expectation. You know, I think it was, you know, like kind of sell out type of thing or close to sell out. So, so that seems to go okay. But, you know, that is Wayne evidence to proclaim where the world is going. It's better than a Pokemon eye with a sharp stick, but you're not going to be able to, you can't extrapolate to, it's dangerous to extrapolate out of that too much. Now, I hope it is. Flood days are not open. Everything's going to go well.

Nicholas T. Pinchuk: You know, I think it was, you know, like, kind of a sellout type of thing or close to sellout. So, so that seemed to go okay, but, you know, that is weak evidence to proclaim where the world is going. It's better than a poke in the eye with a sharp stick.

Speaker Change #105: And, you know, it was pretty close to expectation, you know, I think it was, you know, like kind of sell-out type of thing, or close to sell-out. So, so, that seemed to go okay, but, you know, that is wane evidence.

Nicholas T. Pinchuk: But, you're not going to be able to, you can't extrapolate, it's dangerous to extrapolate out of that too much. Now, I hope it is. The floodgates are going to open, everything is going to go well. Happy days are here again.

Speaker Change #105: to proclaim where the world is going. It's better than a poke in the eye with a sharp stick. But you're not going to be able to, you can't extrapolate to, it's dangerous to extrapolate out of that too much. Now, I hope it is. The floodgates are going to open. Everything is going to go well. Happy days are here again.

Nicholas Pinchuk: Happy days are here.

Nicholas Pinchuk: Okay.

Nicholas T. Pinchuk: Okay, last question for me. Last question for me, if I could, just on credit. I mean, what are you seeing an increase in RA transfer? What would originations have looked like without the RA?

Nicholas Pinchuk: Last question for me. Last question for me, if I could just on credit. I mean, what are you seeing in increase in RA transfers and what would originations look like without the, without the RA transfers and credit penetrating? I'll have to change their data. The mix of activities is pretty much just similar to last quarter. So no, they have not pivoted to RA transfers as a method of funding activity on the end or anything like that.

Speaker Change #106: Last question for me, just on credit, what are you seeing an increase in RA transfers and what would originations have looked like without the RA transfers?

Nicholas T. Pinchuk: I've not really seen... Well, it doesn't change there, David. The mix of activities is pretty much similar to last quarter. So no, they have not pivoted to RA transfers as a method of funding activity on demands or anything like that.

Speaker Change #106: [inaudible]

Scott Lewis Stember: Thanks very much, gentlemen. And our next question will come from Scott Stember with Ross MKM. Please go ahead.

Nicholas Pinchuk: Thanks very much, gentlemen. Sure.

Scott Stember: In our next question, welcome from Scott Stember with Ross NKM.

Speaker Change #107: Great. Thanks very much, gentlemen. Sure.

Speaker Change #108: And our next question will come from Scott Stember with Ross MKM. Please go ahead.

Nicholas Pinchuk: Please go ahead.

Nicholas T. Pinchuk: Good morning, guys. Unknown Speaker Nick, is there a way of trying to see how much of the tool sales decline is really just based on the fact that you still don't have the available capacity to make products? Just trying to frame that out. And if, you know, if you can't do that, maybe just give us an idea of when you expect to have all of the capacity and all the bottlenecks cleared up to make sure that you're at least making what they need? You're thinking, you're thinking toward the future, and if everything's in place, it gets better every day, Scott. You know what I mean?

Nicholas Pinchuk: Good morning, guys. Good morning, Scott. Nick, is there a way of trying to see how much of the tools sales decline is really just based on the fact that you still don't have the available capacity to make product? Just trying to frame that out. And if, you know, if you can't do that, maybe just give us an idea of when would you expect to have all of the capacity and all the bottlenecks cleared up to make sure that you're at least making what they need. You think you're thinking toward the; if everything's in place, it gets better every day, Scott.

Scott Lewis Stember: Good morning, guys.

Scott Lewis Stember: Morning Scott. Nick, is there a way of trying to see how much of the the tool sales decline is really just based on the fact that

Scott Lewis Stember: that you still don't have the available capacity to make product. Just trying to frame that out, and if...

Speaker Change #110: If you can't do that, maybe just give us an idea of when would you expect to have all of the...

Speaker Change #111: Capacity and all the bottlenecks cleared up.

Speaker Change #111: to make sure that you're at least making what they need.

Speaker Change #112: You're thinking toward the, if everything's in place.

Nicholas Pinchuk: You know what I mean? We get better every day in that situation because there because some of the capacity and some of the machines are there. So for example, we're half, we're 50% of the expansion we wanted in flex stock in Milwaukee. So that's helping us, but it's not enough. You know, and so you've got, you've got adjustable wrenches; not enough. You've got some of the smaller ticket tool stores, not enough. You know, so we're getting out of those. On the other hand, it's hard for me to say how much really would play out. I mean, that would give you, that gives you an eligible boost.

Nicholas T. Pinchuk: We get better every day in that situation because there, because some of the capacity is there, and some of the machines are there. For example, we're half, we're 50% of the expansion we wanted in Flexstock in Milwaukee. So that's helping us, but it's not enough. You know, and so you've got adjustable wrenches, not enough. You've got some of the smaller-ticket tool stores, not enough, you know, so we're getting out of those. On the other hand, it's hard for me to say how much it really would play out. I mean, that would give you gradual boosts.

Speaker Change #113: It gets better every day, Scott. You know what I mean? We get better every day in that situation. Because some of the capacity is in there, and some of the machines are there. So, for example, we're 50% of the expansion we wanted in flex stock in Milwaukee. So that's helping us, but it's not enough.

Speaker Change #114: So you've got adjustable wrenches, not enough. You've got some of the smaller ticket tool stores, not enough. So we're getting out of those. On the other hand, it's hard for me to say how much really...

Nicholas Pinchuk: So I do think, I do think you saw, you know, as you know, in the quarter, when you're selling small, when you pivot the smaller ticket items, you've got to sell a lot of wrenches to make up a tool storage box. You know, so it tends to put a, what I would call a weight on your overall revenue. So I think you saw some of that in tools with this quarter. We're trying to fill up the bucket on that, but it's going to take us a while to do. Now, third quarter will be better than the second, and a fourth quarter will be better.

Speaker Change #114: would play out. I mean, that would give you that gives you gradual boosts. So I do think I do think you saw, you know, as you know, in the quarter, when you're selling small, when you pivot to smaller ticket items,

Nicholas T. Pinchuk: So I do think I do think you saw, you know, as you know, in the quarter, when you're selling small, when you pivot the smaller ticket items, you've got to sell a lot of wrenches to make up a tool storage box, you know, so it tends to put a, what I would call a weight on your overall revenue. So I think you saw some of that in tools this quarter. We're trying to fill up the bucket on that, but it's going to take us a while to do it. Now, the third quarter will be better than the second, and the fourth quarter will be better. And the first quarter after that will be better.

Speaker Change #114: You got to sell a lot of wrenches to make up a tool storage box, you know, so it tends to put a, what I would call a weight on your overall revenue. So I think you saw some of that in the tools this quarter. We're trying to fill up the bucket on that, but it

Speaker Change #114: It's going to take us a while to do. Now, third quarter will be better than the second.

Nicholas T. Pinchuk: So when, when, you know, translating that into revenue and profit numbers, it's hard for me to say, really hard for me to say, so I can't really put a number on it. Brandon, just one last question. You know, when you're talking with the shops and just with your franchisees, what are you hearing about how your competitors are faring, at least at the shop level? I'm just just trying to sense if there's any share loss or not. To tell you the truth, shop guys or techs never really mention their competitors to me. You know, so, but I don't know. I'm the CEO, you know, so I'm not so sure they would. I don't know.

Nicholas Pinchuk: And the first quarter after that will be better. So when, when, you know, the, the translating that into, into revenue and profit numbers, it's hard for me to say. You know, really hard for me to say. So I can't really put a number on it.

Speaker Change #114: And a fourth quarter will be better, and a first quarter after that will be better. So when, you know, the translating that into revenue and profit numbers, it's hard for me to say.

Speaker Change #114: Really hard for me to say, so I can't really put a number on it.

Nicholas Pinchuk: Great. And then just that last question. You know, when you're talking with the shops and just, and with your franchisees, what are you hearing about how your competitors are fairing, at least at the shop level? Just, just try to sense if there's a share loss or I don't, you know, tell you the truth. The competitors, the shop guys or techs, never really mentioned the competitors to me. You know, so, but I don't know, I'm the CEO, you know, so I'm not so sure they would. I, I don't know, but they never really, you go into the shops, you'll see, I can see, I don't see any increased presence of the competitors.

Speaker Change #114: Last question, when you're talking with the shops and with your franchisees, what are you hearing about how your competitors are faring, at least at the shop level? I'm just trying to sense if there's any share loss or...

Speaker Change #115: Tell you the truth, shop guys or techs never really mention the competitors to me.

Nicholas T. Pinchuk: But they never really, you go into the shops, you'll see, you can see, I don't see any increased presence of the competitors. I will tell you that when I talk to franchisees, or I talk to our regional sales developers, we're all in here for 12 hours in a room with me. They, they didn't really mention competition, really.

Speaker Change #116: You know, so...

Speaker Change #117: But I don't know, I'm the CEO , you know, so...

Speaker Change #117: I'm not so sure they would, you know, I don't know, but they never really, you go into the shops, you'll see, you can see, I don't see any increased presence of the competitors. I will tell you that when I talk to franchisees, or I talk to

Nicholas Pinchuk: I will tell you that when I talk to franchisees or I talk to our regional sales developers, roll in here for 12 hours in a room with me, they didn't mention the competition really. You know, I think we would say that the enemies who have a mostly. Uncertainty and Us. So we're trying to, you know, the speed at which we can pivot helps some of the problem, but the uncertainty will still lay over even when we fully pivot it. But I don't think that's part of our problem. It doesn't appear to be. So usually the competitors are selling to a different customer base, actually.

Speaker Change #117: Our regional sales developers were all in here for 12 hours in a room with me. They didn't mention the competition, really. You know, I think we would say that the enemies we have are mostly

Nicholas T. Pinchuk: Uncertainty and us. So we're trying to, you know, the speed at which we can pivot helps some of the problem, but uncertainty will still lie over us even when we fully pivot. You know, so you kind of have that going on.

Speaker Change #117: Uncertainty and Us.

Speaker Change #117: So, we're trying to, you know, the speed at which we can pivot helps some of the problem.

Speaker Change #117: But the uncertainty will still lay over even when we fully pivoted, you know, so you kind of got, you kind of got that going on. We don't, we don't see any incursion in it. Now, that doesn't mean we don't look at the product.

Nicholas T. Pinchuk: We don't see any incursion into it. Now, that doesn't mean we don't look at competitive products with a fine tooth comb and try to figure out, well, do they have something we don't have? Can people say it's better?

Speaker Change #117: with a fine-tooth comb and try to figure out, well, do they have something we don't have? Can people say it's better? What is their pricing? How do they deliver? How do they support? You know, what kinds of things can it do for the customer? We do that all the time.

Nicholas T. Pinchuk: What is their pricing? How do they deliver? How do they support?

Nicholas T. Pinchuk: What kinds of things can it do for the customer? We do that all the time. But I don't think that's part of our problem. It doesn't appear to. They sell to a different customer base, actually. Gotcha. Thanks again.

Speaker Change #117: But I don't think that's part of our problem. It doesn't appear to be.

Speaker Change #118: Thanks. Usually the competitors are selling to a different customer base, actually.

Nicholas Pinchuk: Gotcha.

Christopher Glynn: Our next question will come from Christopher Glenn with Oppenheimer. Please go ahead. Hey, thank you. You know, we're just first curious about, you know, net cash position. Now the remaining repurchase authorization, the small proportion of your liquidity.

Speaker Change #118: Gotcha. Thanks again.

Christopher D. Glynn: And our next question will come from Christopher Glynn with Oppenheimer. Please go ahead. Hey, thanks. Yeah, I was just curious about your net cash position now, the remaining repurchase authorizations, a small proportion of your liquidity. So you're kind of in a different spot than I've seen in past years. Wondering how you're thinking about, Well, I'm bigger about it.

Speaker Change #119: And our next question will come from Christopher Glynn with Oppenheimer. Please go ahead.

Christopher D. Glynn: Hey, thanks. Yeah, I was just first curious about, you know, net cash position now, the remaining repurchase authorizations, a small proportion of your liquidity. So you're kind of balance sheet positions in a different spot than I've seen in past years. Wondering how you're thinking about that?

Nicholas Pinchuk: So you're kind of balance sheet positions in a different spot than, than I've seen in past years, wondering how you're thinking about that. Well, I'm better about it. But, but, but, you know, look, I think you have to reassess how we're going forward. I mean, the thing is we, I think you know, our cash, our view of cash, you should, you know, going forward capital usage. And the first, the first idea is to make sure our business is fully funded. Secondly, if we look at the dividend, which the dividends, you know, coming up, and we have paid a dividend every quarter since 1939, and we have never reduced it.

Nicholas T. Pinchuk: But, but, but, you know, look, I think you have to reassess how we're going forward. I mean, the thing is, we, I think, you know, our cash, our view of cash usage, going forward, capital usage. The first, the first idea is to make sure our business is fully funded.

Speaker Change #121: Well, I'm bigger about it.

Speaker Change #122: But, you know, look, I think you have to reassess how we're going forward. I mean, the thing is...

Speaker Change #123: We, I think you know, our cash, our view of cash usage, you know, going forward, capital usage.

Nicholas T. Pinchuk: Secondly, we look at the dividend, which dividend, you know, is coming up, and we have paid a dividend every quarter since 1939, and we have never reduced it. So we assess that in the sense of perpetuity. That's our guiding principle. And but we have increased the dividend, I think, now, every quarter for almost 13 years. On the 14th, I'm not giving you any inside information about whether we're going to increase or go flat or anything.

Speaker Change #124: The first idea is to make sure our business is fully funded. Secondly, we look at the dividend, which is coming up, and we have paid a dividend every quarter since 1939, and we have never reduced it. So we assess that.

Nicholas Pinchuk: So we assess that in a sense of perpetuity. That's our guiding principle. But we have increased the dividend. I think now, every quarter for almost 13 years, if we increase it again, it would be the 14.

Speaker Change #124: in the sense of perpetuity, that's our guiding principle. But we have increased dividends, I think now, every quarter for almost 13 years.

Nicholas Pinchuk: I'm not giving any insight information about whether or not you increase or go flat or anything, but we'll be looking at that pretty carefully. Then we have acquisitions, which we're constantly looking at. And, you know, you've heard the story before that we have this landscape. In fact, we have guys out as we speak looking at other acquisitions. And I don't know if they'll play out or not because we're careful with our money. And then we have stock buyback, which you already pointed out has an authorization now that's a little bit less than it was before.

Speaker Change #124: If we increase it again, it will be the 14th. I'm not giving any inside information about whether we're going to increase or go flat or anything, but we'll be looking at that pretty carefully. Then we have acquisitions.

Nicholas T. Pinchuk: But we'll be looking at that pretty carefully. Then we have acquisitions, which we're constantly looking at. And you know, you've heard the story before that we have this landscape, in fact, we have guys out as we speak, looking at other acquisitions, and I don't know if they'll play out or not because we're careful with our money. And then we have the stock buyback, which you already pointed out, as a, as a localization now that's a little bit less than it was before, and so we'll have to assess that as we go forward.

Speaker Change #124: which we're constantly looking at.

Speaker Change #124: And, you know, you've heard the story before that we have this landscape, in fact, we have guides out as we speak.

Speaker Change #124: Look at other acquisitions, and I don't know if they'll play out or not, because we're careful with our money. And then we have stock buyback, which you already pointed out, has an authorization now that's a little bit less than it was before. So we'll have to assess that as we go forward. That's how I'm thinking of it, really.

Nicholas Pinchuk: And so we'll have to assess that as we go forward.

Nicholas Pinchuk: That's all I'm thinking of it. Really. Okay.

Nicholas T. Pinchuk: That's how I'm thinking of it, really. Okay, and my follow-up question, just back to SOT. I'm curious if there's any interesting geographic dispersion. We've got a big country here, lots of regions, different economies, to a degree, on the incremental weakening, have you seen any kind of dispersion in regions?

Nicholas Pinchuk: And my follow up just back to SOT. I'm curious if there's any interesting geographic dispersion. We've had a big country here. Lots of regions, different economies to a degree on the incremental weakening. You see in any kind of dispersion in regions? Well, I can tell you this. In the last six months, I've met with franchisees and customers in almost, you know, like in the Midwest. in the east, just recently in Syracuse, and Atlanta, and the Southwest. And there hasn't been that much difference. That's one of those scratchers, you know. I think this uncertainty; we saw this before.

Speaker Change #125: Okay, and my follow-up, just back to SOT, I'm curious if there's any interesting geographic dispersion. We've got a big country here, lots of regions, different economies.

Speaker Change #126: to a degree on the incremental weakening. You've seen any kind of dispersion in regions? Well, I can tell you this. In the last six months, I've met with franchisees and customers.

Nicholas T. Pinchuk: Well, I can tell you this, in the last six months, I've met with franchisees and customers in almost, you know, like, the Midwest, in the East, just recently in Syracuse, in Atlanta, and the Southwest. There hasn't been that much of a difference, that's one of the scratchers, you know. I think this uncertainty, we saw this before, I do think the grassroots economy is impacted by the uncertainty broadly, and the techs may be among, maybe the techs are special because car repair continues to be robust, so they are, a lot of people are confidence poor. But the techs are also cash rich in that situation. So that may be part of the issue.

Speaker Change #126: In almost, you know, like in the Midwest, in the East, just recently in Syracuse, in Atlanta, and the Southwest.

Speaker Change #124: A

Speaker Change #124: There hasn't been that much difference. That's one of the scratchers, you know, I think this uncertainty, we saw this before, I do think the grassroots economy is impacted by the uncertainty broadly. And the text may be among, maybe the texts are special, because

Nicholas Pinchuk: I do think the grassroots economy is impacted by the uncertainty broadly. And the text may be among, maybe the texts are special because car repair continues robust. So there are a lot of people are competent poor, but the texts are also cash rich in that situation. So that may be part of the issue. I don't see much. And I talked to our regional guys, you know, all nine regions or any area, you know. And yeah, there's some differences. And we try to look at those differences and try to figure out maybe should we facilitate more. Are those operations different?

Speaker Change #124: Car repair continues robust, so they are, a lot of people are confidence poor.

Speaker Change #124: But the techs are also cash-rich in that situation, so that may be part of the issue. I don't see much, and I talked to our regional guys, you know, all nine regions were in here, you know, and yeah, there's some differences.

Nicholas T. Pinchuk: I don't see much. And I talked to our regional guys. You know, all nine regions are in here, you know. And yeah, there's some difference.

Nicholas T. Pinchuk: And we try to, we try to look at those differences and try to figure out maybe we should facilitate more of those operations. We haven't been able to come up with much, actually. So I don't see much difference, even though you would say there would be.

Speaker Change #124: And we try to, we try to, try to look at those differences and try to figure out, maybe should we facilitate more, are they, are those operations different? We haven't been able to come up with much, actually. So I don't see much difference, even though you would say there would be.

Nicholas Pinchuk: We haven't been able to come up with much, actually. So I don't see much difference, even though you would say there would be. You don't really you get the same story from texts everywhere. You think Texas did get hit with more regulatory compliance costs. The text, I don't, I don't, I don't, I don't, I don't know. I don't think the text, the garages, maybe the garages might get more regulatory compliance costs. I don't think the text so much. They don't mention it so much. I think I don't hear that. I just small businesses. I mean, the financial, social, and manufacturing goes wild over regulations, you know. They talk about how much of cost they say for every small manufacturer.

Nicholas T. Pinchuk: You don't really, you get the same story from techs everywhere. Do you think Texas did get hit with more regulatory and compliance costs? The tech, I don't think, I don't know, I don't think the tech, the garages. The garages might get more regulatory, [inaudible] Thanks, Nick. Sure. And our next question will come from Tom Hayes with CL King. Please go ahead.

Speaker Change #124: You don't really, you get the same story from techs everywhere.

Speaker Change #124: Do you think Texas did get hit with more regulatory and compliance costs?

Speaker Change #124: The text....

Speaker Change #127: I don't think, I don't know, I don't think the tech, the garages maybe.

Speaker Change #127: The garages might get more regulatory.

Speaker Change #127: I don't think the text so much. They don't mention it so much, I think. I don't hear that.

Speaker Change #128: I mean, the National Association of Manufacturers goes wild over regulations, you know, they talk about how much it costs, they say for every small manufacturer, so every small manufacturer has to pay $35,000 per employee per year in regulation costs.

Nicholas Pinchuk: So every small manufacturer to pay $35,000 per employee per year and regulation cost. So I think by extension, you would say small businesses like garages would have that problem, but I don't think text would be burdened with it. Thanks, Nick. Sure.

Speaker Change #128: So I think by extension you would say small businesses, like garages, would have that problem. But I don't think techs would be burdened with it.

Tom Hales: And our next question will come from Tom Hales with CL King.

Nick: Thanks, Nick. Sure.

Nicholas Pinchuk: Please go ahead. Thanks, guys. Appreciate you fitting me in.

Speaker Change #129: And our next question will come from Tom Hayes with CL King. Please go ahead.

Tom Hayes: Thanks, guys. Appreciate you fitting in. Just quickly, Nick, maybe any color you could provide on what you're seeing on the positive side of the critical industries. I think you guys called it out as a bit of a bright spot. Is there anything maybe on avionics or military or natural resources that stands out? Do you mean booming?

Nicholas Pinchuk: Just quickly, Nick, maybe any kind of you could provide that what you're seeing on the positive side on the critical industries. I think you guys called it out as a bit of a bright spot. Is there anything maybe on avionics or military or natural resources that stands out? You mean, as it is, is that the? Yeah, no, there's a couple of just again. And, you know, it's the military has been consistently strong.

Tom Hayes: Thanks, guys. I appreciate you fitting me in. Just quickly, Nick, maybe any color you could provide that what you're seeing on the positive side, on the critical industries. I think you guys called it out as a bit of a bright spot. Is there anything maybe on avionics or military or natural resources that stands out?

Nicholas T. Pinchuk: As it is, is that the, yeah, no, Craig Glynn is a WG again, and, you know, it, it, the military has been consistently strong. A cool thing is we include education in the critical industries because we believe it's critical to influence, and one of the things about it is the education business has been growing nicely, and what that says is young people are hungry for Snap-On products, and so that's a cool thing for us.

Speaker Change #131: You mean, booming?

Speaker Change #132: As it is, is that the, yeah, no, Craig Glynn is, there's a couple of G's again, and, you know, it, it, the military has been consistently strong.

Nicholas Pinchuk: A cool thing is we include education in the critical industries because we believe it's critical to influence. And one of the things about it is the education business has been up nicely. And what that says is the young people are hungry for Snap-on products. And so that's a cool thing for us. We really like that.

Speaker Change #133: A cool thing is we include education in the critical industries because we believe it's critical to influence. And one of the things about it is the education business has been up nicely. And what that says is the young people are hungry for Snap-On products.

Nicholas Pinchuk: So you see that I don't, I don't have anything in terms of why it seemed like aviation was strong this quarter, and I would expect to continue. And you have to believe, given the following situation, that customers and aviation would be pretty anxious to be able to have accuracy and documentation, which we offer in space in our product for that particular industry. And I think that's driving some of it. I think the military is obvious. I think the military of every nation is on edge. For example, you know, you have countries in Europe who are looking to double their military, and they're coming to us to help them upgrade to manage their fleet of airplanes.

Speaker Change #133: And so that's a cool thing for us. We really like that. So you see that. I don't have anything in terms of, boy, it seemed like aviation was strong this quarter, and I would expect it to continue. And you'd have to believe, given the Boeing situation,

Nicholas T. Pinchuk: We really like that, customers in aviation would be pretty anxious to be able to have accuracy and documentation, which we offer in space. In our product for that particular industry, and I think that's driving some of it. I think the military is obvious.

Speaker Change #133: that customers in aviation would be pretty anxious to be able to have accuracy and documentation, which we offer in spades.

Speaker Change #133: in our product.

Nicholas T. Pinchuk: I think the military, you know, every nation is on the edge. For example, you have countries in Europe who are looking to double their, their military, and they're coming to us to help them upgrade and manage their fleet of airplanes. And so you see some of that. So I think those two.

Speaker Change #133: for that particular industry. And I think that's driving some of it.

Speaker Change #133: I think the military is obvious. I think the military, you know, every nation is on edge. For example, you know, you have countries in Europe who are looking to double their military and they're coming to us to help them upgrade to manage their fleet of airplanes. And so you see some of that. So I think...

Nicholas Pinchuk: And so you see some of that. So I think those two, those two types of general thrusts are working. But you also see, in a general industry, was strong. The overall industry is strong because I think the industry in this time is looking for efficiency, and repair is efficiently the quicker you can do it.

Speaker Change #133: Those two types of general thrusts are working. But you also see in a general industry we're strong. The overall industry is strong. Because I think the industry in this time is looking for efficiency, and repair is efficiently the quicker you can do it. Now, the overarching thing that we're noting is that in all these industries,

Nicholas Pinchuk: Now, the overarching thing that we're noting is that in all these industries, they're looking for customized products that will match their particular problems because the critical industries is replete with those opportunities and tasks where you have to have a particular array of products to match them. That's why the customer getting is doing so well. We almost have not many competitors in this situation as a manufacturer. So that is really working for us. And it seems like whatever, whenever we give the industrial group one way, they run the daylight and take... Thank you. So I think we feel pretty good about that business.

Speaker Change #133: They're looking for customized products that will match their particular problems.

Speaker Change #133: Because the critical industry is replete with those opportunities and tasks where you have to have a particular array of products to match them. That's why the custom kitting is doing so well. We almost have not many competitors in this situation as a manufacturer.

Speaker Change #133: So, that is really working for us, and it seems like whenever we give the industrial group runway, they run to daylight and take it.

Nicholas Pinchuk: Appreciate the color. Thank you.

Speaker Change #133: So I think we feel pretty good about that position, that business.

Operator: Sure. And this will conclude our question-and-answer session.

Speaker Change #134: Appreciate the color. Thank you. Sure.

Sara Verbsky: I'd like to turn the conference back over to Sara Verbsky for any closing remarks.

Speaker Change #134: And this will conclude our question and answer session. I'd like to turn the conference back over to Sara Verbsky for any closing remarks.

Sara Verbsky: 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.

Sara M. Verbsky: 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.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time. Thank you.

Speaker Change #135: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.

Speaker Change #135: https://www.youtube.com.action-circlelineartschool.com

Speaker Change #136: Please see the complete disclaimer at https://sites.google.com Please see the complete disclaimer at https://sites.google.com

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Speaker Change #137: ??ress 10 ?? Director Project Thank you for watching

Operator: Hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey Our second quarter.

Nicholas T. Pinchuk: And those two types of general thrusts are working. But you also see that in the general industry, we're strong; the overall industry is strong. Because I think the industry at this time is looking for efficiency, and repair is efficient the quicker you can do it. Now the overarching thing that we're noting is that in all these industries, they're looking for customized products that will match their particular problems because the critical industries are replete with those opportunities and tasks where you have to have a particular array of products to match them. That's why the custom kidding is doing so well.

Speaker Change #138: Good day and welcome to the Snap-On Incorporated 2024 Second Quarter Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change #139: After today's remarks, there will be an opportunity to ask questions.

Sara M. Verbsky: To ask a question, you may press star then 1 on your touch tone phone. To withdraw your question, please press star then 2. Please note that this event is being recorded. I would now like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Nicholas T. Pinchuk: We almost do not have many competitors in this situation as a manufacturer, so that is really working for us. And it seems like whatever we give the industrial group runway, they run to daylight and take it, So I think we feel pretty good about that position. Appreciate the color.

Sara M. Verbsky: Thank you. And this will conclude our question and answer session. I'd 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.

Operator: As always, we appreciate your interest in Snap-On. Good day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time. © BF-WATCH TV 2021, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day and welcome to the Snap-On Incorporated 2024 Second Quarter Results Conference Call. All participants will be in a listen-only mode.

Speaker Change #140: As usual we provided slides to supplement our discussion. These slides can be accessed under the downloads tab in the webcast viewer as well as on our website snap-on.com under the investor section. These slides will be archived on our website along with a transcript of today's call.

Speaker Change #140: Any statements made during this call relative to management 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.

Speaker Change #140: 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 #140: 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.

Speaker Change #140: 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?

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

Nicholas T. Pinchuk: Thanks, Sara. Good morning, everybody.

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

Of course, the word challenges. Uncertainly the main prominent among our technician customers, but our repair system is an information, or ours and I group, with repair shop owners and managers. And our commercial and industrial are C and I group, enabling critical tasks outside the vehicle shop. They both progressed very nicely, taking full advantage of their opportunities and balancing the tech turbulence in tools. So our results in the second quarter are a clear and unmistakable demonstration that Snap-On's principal value creating mechanism. Observing work right in the workplace, using the insights learned to create products that make critical tasks easier and more efficient.

Nicholas T. Pinchuk: A second quarter.

Aldo: Of course, there were challenges. Uncertainty remained prominent among our technician customers, but...

Speaker Change #141: Our Repair Systems and Information, or RS&I Group, with Repair Shop Owners and Managers, and our Commercial and Industrial, or CNI Group, enabling critical tasks outside the vehicle shop, they both progressed very nicely, taking full advantage of their opportunities and balancing the tech turbulence in tools.

Speaker Change #141: So our results in the second quarter are a clear and unmistakable demonstration that Snap-On's principal value creating mechanism

Speaker Change #141: Observing work right in the workplace, using the insights learned to create products that make critical tasks easier and more efficient. That works across many industries and in many environments. It highlights that our enterprise is not dependent on a particular customer base.

That works across many industries and in many environments. It highlights that our enterprise is not dependent on a particular customer base. We believe it shows that as we move forward reaching higher, we do so with greater resilience and with expanding possibilities and with an enterprise that's broader and stronger than ever before. Like most quarters, we did have Edwin's. We had opportunities with disparities from group to group and geography to geography. North America remained mixed, with significant gains in critical industries. Internationally, our consolidated results were varied, but reflected overall positive. Europe showed some signs of recovery among the scattered economic disruptions from region to region.

Speaker Change #141: We believe, it shows that as we move forward, reaching higher, we do so with greater resilience and with expanding possibilities, and with an enterprise that's broader and stronger than ever before.

Speaker Change #141: Like most quarters, we did have headwinds. We had opportunities with disparities from group to group and geography to geography.

Speaker Change #141: North America remained mixed, with significant gains in critical industries. Internationally, our consolidated results were varied, but reflected overall positives. Europe showed some signs of recovery among the scattered economic disruptions from region to region, and the Asia-Pacific markets registered progress.

And the Asia Pacific market, markets the registered progress overcoming the delayed recovery in China.

So now let's talk about the results. Second quarter sales of 1 billion 179.4 million were slightly down from the 1 billion 191.3 million of last year. On an organic basis, excluding 5.7 million and unfavorable foreign currency, and 7.3 million from acquisitions, our sales were lower by 1.1%. The op-go operating income or OI margin for the full quarter was 23.8%, up 50 basis points. Now, with that said, that level included the benefit of a final payment from our recent legal win. If including that addition, the OI margin was 22.8%, down from 2023, but still among our very best, surpassed only by the record-setting second quarter of last year.

Speaker Change #141: Overcoming the Delayed Recovery in China.

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

Speaker Change #141: So now let's talk about the results.

Speaker Change #142: Second quarter sales of $1,179,400,000 were slightly down from the $1,191,300,000 of last year. On an organic basis, excluding $5.7 million in unfavorable foreign currency and $7.3 million from acquisitions, our sales were lower by 1.1%.

Nicholas T. Pinchuk: Of course, there were challenges. Uncertainty remained prominent among our technician customers, but our Repair Systems and Information, or RS&I Group, with repair shop owners and managers, and our Commercial and Industrial, or C&I Group, enabling critical tasks outside the vehicle shop, they both progressed very nicely, taking full advantage of their opportunities and balancing the tech turbulence in tools. So our results in the second quarter are a clear and unmistakable demonstration that Snap-On's principal value-creating mechanism, observing work right in the workplace, using the insights learned to create products that make critical tasks easier and more efficient, works across many industries and in many environments.

Speaker Change #142: The opco operating income or OI margin for the full quarter was 23.8%, up 50 basis points.

Speaker Change #142: Now with that said, that level included the benefit of a final payment from our recent legal win.

Speaker Change #142: Excluding that addition, the OI margin was 22.8% down from 2023, but still among our very best, surpassed only by the record-setting second quarter of last year.

For financial services, the OI grew to 70.2 million from the 66.9 million recorded in 2023. A number that wouldn't combine with our op-go results raised the consolidated OI margin to 27.4%, up 60 basis points over the 26.8 of 2023. And EPS, it was $5.07, which included a benefit from the legal payment of 16 cents. Again, excluding that legal item, EPS was $4.91, still above last year and representing a new snap-on level for any quarter. Strength and progress against the wind.

Speaker Change #142: For financial services, the OI grew to 70.2 million from the 66.9 million recorded in 2023. A number that, when combined with our OPCO results, raised the consolidated OI margin to 27.4 percent, up 60 basis points, over the 26.8 of 2023. And EPS?

Speaker Change #142: It was $5.07, which included a benefit from the legal payment of $0.16. Again, excluding that legal item, EPS was $4.91, still above last year.

Speaker Change #142: and representing a new Snap-On level for any quarter.

Nicholas T. Pinchuk: It highlights that our enterprise is not dependent on a particular customer base. We believe it shows that as we move forward, reaching higher, we do so with greater resilience and with expanding possibilities and with an enterprise that's broader and stronger than ever before. Like most quarters, we did have headwinds.

Speaker Change #142: Strength and Progress Against the Wind.

So those are the overall numbers. Now for a view with the market. The second quarter, once again, highlighted that the opportunities in automotive repair continue to be favorable, marked by the ever-expanding complexity of design, new and diverse powertrains, more interlocking systems to advance driving, driving autonomy, a raise of drive-by-wire sensors, new body materials, and an aging car park now averaging 12.6 years. The opportunity in vehicle repair exists industry-wide, and they appear to be unwavering. The vehicle OEMs, the dealerships, and the independent shops recognize the positive trend, and they continue to invest in tools and equipment that will expand their capabilities to support the influx of new models and the ever rising complexity of repair.

Nicholas T. Pinchuk: We had opportunities with disparities from group to group and geography to geography. North America remained mixed, with significant gains in critical industries. Internationally, our consolidated results were varied but reflected overall positives. Europe showed some signs of recovery among the scattered economic disruptions from region to region, and the Asia-Pacific markets registered progress overcoming the delayed recovery in China. So now let's talk about the results. Second quarter sales of $1,179,400,000 were slightly down from the $1,191,300,000 of last year.

Nicholas T. Pinchuk: On an organic basis, excluding $5.7 million in unfavorable foreign currency and $7.3 million from acquisitions, our sales were lower by 1.1%. The opco operating income or OI margin for the full quarter was 23.8%, up 50 basis points. Now, with that said, that level included the benefit of a final payment from our recent legal win. Excluding that addition, the OI margin was 22.8%, down from 2023, but still among our very best, surpassed only by the record-setting second quarter of last year.

Nicholas T. Pinchuk: For financial services, the OI grew to 70.2 million from the 66.9 million recorded in 2023, a number that, when combined with our OPCO results, raised the consolidated OI margin to 27.4%, up 60 basis points over the 26.8 of 2023. And EPS was $5.07, which included a benefit from the legal payment of $0.16.

Nicholas T. Pinchuk: Again, excluding that legal item, EPS was $4.91, still above last year, and representing a new Snap-On level for any quarter, showing strength and progress against the wind. So those are the overall numbers. Now for a view of the markets. The second quarter once again highlighted the opportunities in automotive repair; they continue to be favorable, marked by the ever-expanding complexity of design, new and diverse powertrains, more interlocking systems to advance driving autonomy, arrays of drive-by-wire sensors, new body materials, and an aging car park now averaging 12.6 years.

Speaker Change #142: So those are the overall numbers.

Speaker Change #142: Now for a view of the markets.

Speaker Change #142: The second quarter, once again, highlighted that the opportunities in automotive repair, they continue to be favorable, marked by the ever-expanding complexity of design. New and diverse...

Speaker Change #142: Power trains, more interlocking systems to advance driving autonomy, arrays of drive-by-wire sensors, new body materials, and an aging car park now averaging 12.6 years. The opportunity in vehicle repair exists industry-wide, and they appear to be unwavering.

Speaker Change #142: The vehicle OEMs, the dealerships, and the independent shops recognize this.

Speaker Change #142: The Positive Trend, and they continue to invest in tools and equipment that will expand their capabilities to support the influx of new models and the ever-rising complexity of repair.

And in the quarter, our S&I group expanded our reach into OEM dealership programs and strengthened our position in independent contracts with our repair management software packages and with great new hardware products. So the possibility with repair shop owners and managers is strong, the outlook looking forward is quite positive, and Snap-On is well positioned to seize the opportunities.

Speaker Change #143: And in the quarter, our RS&I group expanded our reach into OEM dealership programs and strengthened our position in independent corrections with our repair management software packages and with great new hardware products.

Speaker Change #143: So the possibility with repair shop owners and managers are strong, the outlook looking forward is quite positive, and Snap-On is well positioned to seize the opportunities.

Now let's shift to the technicians. These are folks who turn the ranges, make the diagnoses, and execute the repair. Again, in this quarter, I had multiplications to meet with the franchisees, the garage owners, and the techs, and it reconfirmed that the shops and the technicians are prospering. The micro data says it's true, repair hours are up, tech wages are healthy, the demand for techs is strong, and the number of techs are increasing. The number of techs is increasing; it makes sense: new systems, the rising complexity, the aging car parts, makes what the techs do more difficult and more valuable.

Speaker Change #143: Now let's shift to the technicians.

Speaker Change #143: These are the folks who turn the wrenches, make the diagnoses, and execute the repairs. Again, this quarter, I had multiple occasions to meet with the franchisees, the garage owners, and the techs, and it reconfirmed that the shops and the technicians are prospering. The microdata says it's true. Repair hours are up.

Speaker Change #143: Tech wages are healthy, the demand for techs is strong, and the number of techs is increasing. The number of techs is increasing. It makes sense. New systems, the rising complexity, the aging car park, makes what the techs do more difficult and more valuable.

So the economic trajectory of vehicle repair is quite positive. It's an attractive place to be. But it's also clear that while the techs are busy and have cash, their confidence in the way forward is still poor. Every day there's bad news, two wars with no end in sight, the border unsettled, the shipping lanes disrupted, tinted for tact with China, lingering inflation, and the election. It seems to get more unpredictable with every morning news cycle; the hits just keep on coming for bad news for breakfast. It's almost like the grassroots technicians have a fear of what may happen, and paraphrasing the movie, doomed, fear is the outlook pillar.

Speaker Change #143: So the economic trajectory of vehicle repair is quite positive.

Nicholas T. Pinchuk: But it's also clear that while the techs are busy, and Half Cash, their confidence in the way forward is still poor. Every day, there's a bad news story, Two wars with no end in sight. The Border Unsettled, The Shipping Lanes Disrupted, Tint for Tat with China, Lingering Inflation, and The Election seems to get more unpredictable with every morning news cycle. The hits just keep on coming for bad news for breakfast.

Speaker Change #143: It's an attractive place to be.

Speaker Change #144: But it's also clear that while the techs are busy,

Speaker Change #145: And have cash. Their confidence in the way forward is still poor. Every day there's bad news.

Speaker Change #146: Two wars with no end in sight. The border unsettled, the shipping lanes disrupted, tit-for-tat with China, lingering inflation, and the election. The election!

Speaker Change #147: Seems to get more unpredictable with every morning news cycle. The hits just keep on coming for bad news for breakfast. It's almost like the grassroots technicians have a fear of what may happen. And paraphrasing the movie Dune, fear is the outlook killer.

Nicholas T. Pinchuk: It's almost like the grassroots technicians have a fear of what may happen. And, paraphrasing the movie Dune, fear is the outlook killer. The franchisees also confirmed to us that with the general uncertainty, the techs are leaning toward purchases that provide quick payback while making the work easier right away. They're kind of cool on longer-term, bigger-ticket items. And knowing that, the tools group continues to focus on near-term product development, manufacturing changes, and selling efforts that match those preferences.

The franchise is also confirmed to us that, with the general uncertainty, the techs are leaning toward purchases that provide quick paybacks while making the work easier right away. They're kind of cool on longer term, bigger ticket items. And knowing that, the tools will continue to focus on near-term product development, manufacturing changes, and selling efforts that match those preferences.

Speaker Change #148: The franchisee is also confirmed to us.

Speaker Change #149: That with the general uncertainty, the techs are leaning toward purchases that provide quick paybacks while making the work easier right away. They're kind of cool on longer-term, bigger-ticket items. And knowing that, the tools group continues to focus on near-term product development, manufacturing changes, and selling efforts that match those preferences.

So now let's talk about the critical industries. We're snap on rules out of the garage, solving tasks of significant consequence. This is where the CNI Group operates, and it's our most significant international presence. The area where we're most subject to global headwinds, but the news was still reasonably encouraging. For the sectors, the critical industries kept rising in the period; the military, aviation, and education segments led the way. For geographies, Europe was mixed; several countries in recession, and the ongoing impacts of the Ukraine war. Asia Pacific also remained mixed. China was weak, driven by its delayed financial recovery, and Southeast Asia again had its difficulties.

Nicholas T. Pinchuk: So now let's talk about critical industries, where Snap-On rolls out of the garage solving tasks of significant consequence. This is where the CNI group operates, and it's our most significant international presence, the area where we're most subject to global headwinds.

Speaker Change #149: So now let's talk about the critical industries, where Snap-On rolls out of the garage, solving tasks of significant consequence.

Speaker Change #149: This is where the CNI group operates, and it's our most significant international presence, the area where we're most subject to global headwinds.

Speaker Change #149: The news was still reasonably encouraging. For the sectors, the critical industries kept rising in the period. The military, aviation, and education segments led the way.

Speaker Change #149: For geographies, Europe was mixed, several countries in recession, and the ongoing impacts of the Ukraine war. Asia-Pacific also remained mixed. China was weak, driven by its delayed financial recovery, and Southeast Asia again had its difficulties.

But both regions, for CNI and for the corporation in total, were positive in the quarter despite the variation. Now speaking more than now, I'd like to speak more about the critical industry. The demand for customized solutions to drive reliability and productivity keeps rising, and CNI continues to show significant, embroidered advances in Adirina, and we believe there's more common.

Speaker Change #149: Both regions, for C&I and for the corporation in total, were positive in the quarter, despite the variations.

Nicholas T. Pinchuk: Both regions, for CNI and for the corporation in total, were positive in the quarter, despite the variations. Now speaking more than I did before, I'd like to speak more about the critical industry. The demand for customized solutions to drive reliability and productivity keeps rising. And CNI continues to show significant and broader advances in that arena, and we believe there's more coming. So that's the market, vehicle techs, cash rich but confidence poor, preferring quick payback payback products, repair shop owners, and managers moving upward to match the car park and the critical industries booming outside the garage. In C&I, so let's cover the groups now.

Speaker Change #149: Now speaking more, now I'd like to speak more about the critical industries. The demand for customized solutions to drive reliability and productivity keeps rising and CNI continues to show significant and broad advances in that arena and we believe there's more coming.

So that's the market, vehicle tech, cash rich with confidence poor, preferring quick payback products, repair shop owners and managers moving upward to match the car park, and the critical industries booming outside the garage. And CNI, so let's cover the groups now. And CNI sales were 372 million, representing an organic sales gain of 1.2% excluding 7.3 million of acquisition-related sales and 3.8 million of unfavorable foreign currency. Higher activity with customers based in those critical industries, and the gains in Asia, and the gain in Asia that defies the turbulence, more than offset the clients in our power tool and European based hand tools.

Speaker Change #149: So that's the markets, vehicle techs, cash rich but confidence poor, preferring quick payback products, repair shop owners and managers moving upward to match the car park, and the critical industries booming outside the garage.

Nicholas T. Pinchuk: In C&I, sales were 372 million, representing an organic sales gain of 1.2% excluding 7.3 million of acquisition-related sales and 3.8 million in unfavorable foreign currency. Higher activity with customers based in those critical industries and the gains in Asia and a gain in Asia that defies the turbulence more than offset declines in our power tool and European-based hand tool operations. It was 16.7%, up 70 basis points, representing a new record for that group.

Speaker Change #149: and C&I. So let's cover the groups now.

Speaker Change #149: In C&I, sales were $372 million.

Speaker Change #149: Representing an organic sales gain of 1.2%, excluding $7.3 million of acquisition-related sales and $3.8 million in unfavorable foreign currency. Higher activity with customers based in those critical industries, and a gain in Asia that defies the turbulence, more than offset declines in our power tool and European-based hand tool operations.

From an earnings perspective, CNI, OI, 62.2 million improved 4.1 million, or 7.1% above last year. And the OI margin, it was 16.7%. Up 70 basis points, representing a new record for that group; gangbusters, gangbusters for those guys. And the big driver was our international division, continuing its upward trajectory with a double-digit rise and very strong profitability. You know, about 18 months ago, we expanded our capability to make more easier outside the garage by adding another building for the industrial custom-kitting, serving a range of critical segments. And it's paid off, paid off, big. Since then, that business has been on a tear, baffle, cranking out more and more of the spoke product bundles, sophisticated solutions like our automated tool control units that have become the standard for a range of industries, custom kit offerings aimed at specific applications and at making the critical work easier and more reliable.

Speaker Change #149: From an earnings perspective, C&I OI of $62.2 million improved $4.1 million, or 7.1% above last year. And the OI margin?

Speaker Change #149: It was 16.7%.

Speaker Change #149: up 70 basis points, representing a new record for that group. Gangbusters!

Nicholas T. Pinchuk: And the big driver was our international division, continuing its upward trajectory with a double-digit rise and very profitable. You know, about 18 months ago, we expanded our capability to make work easier outside the garage by adding another building for industrial custom kitting, serving a range of critical segments. And it's paid off. P.A.T.O.R. P.E.

Speaker Change #150: Gangbusters for those guys.

Speaker Change #150: And the big driver was our international division, continuing its upward trajectory with a double-digit rise and vary.

Speaker Change #150: Strong profitability.

Speaker Change #150: You know, about 18 months ago, we expanded our capability to make work easier outside the garage by adding another building for industrial custom kitting, serving a range of critical segments, and it's paid off.

Speaker Change #150: P-A-L-L-I-R-P

Speaker Change #150: Send send.

Speaker Change #150: That business has been on a tear. Baffle! Cranking out more and more bespoke product bundles, sophisticated solutions like our automated tool control units that have become the standard for a range of industries. Custom kit offerings aimed at specific applications and at making the critical work easier and more reliable. It's driven some nice gains all around the world. And we believe...

It's driven some nice gains all around the world. And we believe we see many more possibilities in that arena. So we continue to invest in critical industries, expanded capabilities, like in our custom tool machine shop in Kenosha, producing low volume, high reward items for the most essential tasks. For example, using an oil drilling site, we saw that adding a section of pipe on the rigs requires technicians to move around the circumference, constantly repositioning the turning tool. It's a slow and clumsy and imprecise effort. Our custom team tackled the problems, designing both a new spoke wrench, both a new bespoke wrench, both designing a new bespoke wrench specifically for the task, and enabled by our new Kenosha machine shop, configured a special machining process to produce it.

Speaker Change #150: We see many more possibilities in that arena.

Speaker Change #150: So we continue to invest in critical industries, expanding capabilities, like in our custom tool machine shop in Kenosha, producing low volume, high reward items for the most essential tasks. For example, visiting an oil drilling site, we saw that adding a section of pipe on the rigs requires technicians to move around the circumference.

Nicholas T. Pinchuk: For example, visiting an oil drilling site, we saw that adding a section of pipe on a rig requires technicians to move around the circumference, constantly repositioning the turning tool. It's a slow, clumsy, and imprecise effort. Our custom team tackled the problem, designing both a new bespoke wrench specifically for the task, and enabled by our new Kenosha machine shop, configured a special machining process to produce them, and they all work.

Speaker Change #150: Constantly repositioning the turning tool. It's a slow and clumsy and imprecise effort.

Speaker Change #150: Our custom team tackled the problem, designing both a new bespoke wrench, both designing a new bespoke wrench specifically for the task, and enabled by our new Kenosha machine shop, configured a special machining process to produce it.

And in all words, the special oil rig pipe wrench greatly reduced the rework associated with misalignments and substantially decreased the task time, getting the job done more efficiently and more reliably, and along the way expanding the Snap-on reputation in the critical oil and gas sector.

Speaker Change #150: And it all worked. The special oil rig pipe wrench greatly reduced the rework associated with misalignments and substantially decreased the task time, getting the job done more efficiently and more reliably, and along the way, expanding the Snap-On reputation in the critical oil and gas sector.

Director. Also in the quarter, we introduced a new line of 14.4 volts, micro-powered drills, aimed specifically at diverse applications in aviation and general manufacturing. Test and all sectors vary from certain wood screws to drilling accurate holes and airframes to high volumes on production lines. The span of a variety, each tool in the new line and as a range of them is set to a different RPM range, enabling the tech to fit the speed to the job, substantially reducing rework or irreversible damages, damage. The drills, it's also designed for two operating stages: the first slower, allowing the tools to bite into the materials, securing a position for the serious drilling; and the second stage, performing that serious drilling at the pre-determined RPM, making it quick and clear cut.

Nicholas T. Pinchuk: We introduced a new line of 14.4 volts micropower drills aimed specifically at diverse applications in aviation and general manufacturing. Pass-and-No sectors vary from inserting wood screws to drilling accurate holes in airframes to high volumes on production lines. To span the variety, each tool in the new line, and there's a range of them, is set to a different RPM range, enabling the tech to fit the speed to the job, substantially reducing rework or irreversible damages. It's also designed for two operating stages. The first is slower.

Speaker Change #150: Also in the quarter.

Speaker Change #150: We introduced a new line of 14.4 volts micro-powered drills aimed specifically at diverse applications in aviation and general manufacturing.

Speaker Change #151: Pants in all sectors.

Speaker Change #151: vary from inserting wood screws to drilling accurate holes in airframes to high volumes on production lines.

Speaker Change #151: to expand the variety of each tool in the new line.

Speaker Change #151: and there's a range of them, is set to a different RPM range, enabling the tech to fit the speed to the job, substantially reducing rework or irreversible damages, damage.

Speaker Change #151: It's also designed for two operating states, the first, slower.

Nicholas T. Pinchuk: Allowing the tools to bite into the materials, securing a position for the serious drilling. And the second stage, performing that serious drilling at the predetermined RPM, making quick and clear cuts. Our new industrial micro drills, with their two-stage design, are up to the task, bringing new levels of accuracy, consistency, and reliability to the work.

Speaker Change #151: Allowing the tools to bite into the materials, securing a position for the serious drilling. And the second stage, performing that serious drilling at the predetermined RPM, making a quick and clear cut. Our new industrial micro drills, two-stage design, match to the task, bringing new levels of accuracy, consistency, and reliability to the work. It's a superior tool for the varied tasks of those sectors, and the customers have noticed.

Our new industrial micro-gills, two stage design, match to the task, bringing new levels with accuracy, consistency and reliability to the work. It's a superior tool for the very task of those sectors and the customers have noticed.

CNI in the quarter, launching customized solutions, maintaining its strong momentum in the critical industry, extending out of the garage and reaching new heights in profitability.

Speaker Change #152: See an eye in the quarter, launching customized solutions, maintaining its strong momentum in the critical industry, extending out of the garage and reaching new heights in profitability. Now for the tools group.

Now for the tools group. Sales in the second quarter of 482 million, including an organic decrease of 7.7%. The group's OI margin of period was 23.8%, down 250 basis points due to the lower bonds, but gross margins held down 20 basis points, almost flat. The benefits of new product, manufacturing efficiencies, and rapid continuous improvement are RCI is written all over those numbers. And during the quarter, we continue to focus our product development, redirect our plans, and guide our selling programs toward innovative quick payback solutions that drive productivity. A quarter stone for the pivot is rooted in customer in our customer connection, standing side by side with the technicians, observing the work, witnessing the difficulties of modern and complex repair, and using the inside game to create a tool that makes especially difficult tasks much easier.

Speaker Change #152: Sales in the second quarter of $482 million included an organic decrease of 7.7%. The group's OI margin in the period was 23.8%, down 250 basis points due to the lower volumes.

Speaker Change #152: But gross margins held.

Nicholas T. Pinchuk: The Benefits of New Products, Manufacturing Efficiencies, and Rapid Continuous Improvement, or RCI, are written all over those. And during the quarter, we continue to focus our product development, redirect our plans, and guide our selling programs for innovative, quick payback solutions that drive productivity. A cornerstone for the pivot is rooted in the customer, in our customer connection, standing side by side with the technicians, observing the work, witnessing the difficulties of modern and complex repair, and using the insights gained to create a tool that makes especially difficult tasks much easier.

Speaker Change #152: Down 20 basis points.

Speaker Change #152: Almost flat.

Speaker Change #152: The benefits of new product, manufacturing efficiencies, and rapid continuous improvement or RCI is written all over those numbers.

Speaker Change #152: And during the quarter, we continue to focus our product development, redirect our plans, and guide our selling programs toward innovative, quick payback solutions that drive productivity. A cornerstone for the pivot is rooted in our customer connection.

Speaker Change #153: Standing side by side with the technicians, observing the work, witnessing the difficulties of modern and complex repair, and using the insights gained to create a tool that makes especially difficult tasks

In the second quarter of those insights, let the tool group to design a new torque adapter for use on Ford E-Series commercial vans. The standard procedure for basic brake repair on that model requires the rear caliper bolts to be torqued at over 160 foot-pounds. Not so easy. And the task made doubly difficult because the bolt is obstructed, making it impossible to access the area with standard tooling without removing auxiliary parts; a big time meter. So we've specifically configured a 21 millimeter, 12.6 inch flat adapter with a half-inch tech drive to make the work easier and specification.

Speaker Change #153: The second quarter of those insights led the tool group to design a new torque adapter for use on Ford E-Series commercial vans. The standard procedure for basic brake repair on that model requires the rear caliber bolts to be torqued at over 160 ft-lbs.

Nicholas T. Pinchuk: Not so easy, and the task is doubly difficult because the bolt is obstructed. Making it impossible to access the area with standard tooling without removing auxiliary parts, a big time eater. So we've specifically configured a 21-millimeter, 12.6-inch flat adapter with a half-inch hex drive to make the work easier and more precise. The device nestles perfectly between the particular obstructions on the model, engaging the fastener, turning a time-consuming task into one of just seconds and freeing the tech up to tackle the next repair order. It's made in our Elizabethan, Tennessee plant, and it brings great value to the techs working on the E-Series, and you know, there are a lot of them.

Speaker Change #154: Not so easy.

Speaker Change #154: And the task made doubly difficult because the bolt is obstructed.

Speaker Change #154: Making it impossible to access the area with standard tooling without removing auxiliary parts. A big time eater.

Speaker Change #155: So we've specifically configured a 21mm, 12.6 inch flat adapter with a half inch hex drive to make the work easier and specification.

The device nestles perfectly between the particular obstructions on the model, engaging the fastener, turning a time-consuming task into one of just seconds, and freeing the tech up to tackle the next repair order. It's made in our Elizabethan Tennessee plant, and it brings great value to the techs working on the E-Series, and you know there's a lot of them. Another example is a struggle observed when we observed when removing a canister cap that houses the fuel filter on four Super-Duty trucks. Access to the 36 millimeter hex structure on top of the cap is impeded by other components.

Speaker Change #155: The device nestles perfectly between the particular obstructions on the model.

Speaker Change #154: Engaging the fastener, turning a time-consuming task into one of just seconds.

Nicholas T. Pinchuk: Another example is the struggle observed when we observed when removing a canister cap that houses the fuel filter on four super-duty trucks. Access to the 36 millimeter hex structure on the top of the cap is impeded by other components. Standard pliers or sockets are out. Seeing the problem, our team created a special, low-profile socket, tapered gradually, just to slide into position under the blocking hoses, and then, using a standard ratchet and extension, easily removing the cap, complete the repair, and complete the repair.

Speaker Change #154: Another example is the struggle we observed when removing a canister cap that houses the fuel filter on Ford Super Duty trucks. Access to the 36mm hex structure on the top of the cap is impeded by other components. Standard pliers or sockets are out.

Standard pliers or sockets are out. Seeing the problem, our team created a special low profile socket tapered gradually just to slide into position under the blocking hoses, and then using a standard ratchet and extension, easily removing the cap. Complete the repair, a complicate and complete the repair. A complicated job made much easier. Produced in our Milwaukee plant, it's another quick way back item that makes the substantial difference, and the text love it. A final example comes from reserving technicians walking to and from the workpiece back and forth from the buck to achieve standard pliers for basic tasks.

Speaker Change #154: Seeing the problem, our team created a special, low-profile socket, tapered gradually, just to slide into position under the blocking hoses, and then, using a standard ratchet and extension, easily removing the cap. Complete the repair, and complete the repair. A complicated job made much easier.

Speaker Change #154: Produced in our Milwaukee plant, it's another quick payback item that makes a substantial difference and the techs love it.

Speaker Change #154: A final example comes from observing technicians walking to and from the workpiece.

A compact design seemed to be the solution. So we expanded our triple joint plier line to develop a small 4.5 inch plier set with three models, a combination of long nose and a plank drive slip joint version for versatility. And they were all pocket size to be always at the ready to pull it out of your pocket, and you're ready to go. And all designed for to allow immediate access to remove low torque fasteners and places to pull through to adjust hoses or provide, you know, some additional gripping lever leverage for basic repair or just inspections.

Speaker Change #154: Back and forth from the box. To achieve standard pliers for basic tasks, a compact design seemed to be the solution. So we expanded our triple joint plier line to develop a small 4.5 inch plier set with three models, a combination of long nose and a plank drive slip joint version for versatility.

Nicholas T. Pinchuk: And they were all pocket-sized to be always at the ready; pull them out of your pocket, and you're ready to go. And all designed to allow immediate access to remove low torque fasteners in places, to pull fuses, to adjust hoses, or provide some additional gripping leverage for basic repairs or just inspections. The new units save steps and make work easier in tight spaces, and they're offered in two handle models, with a cushioned grip to reduce hand fatigue. And for the first time, our bare metal, diamond plate texture that provides a superior grip even with sweaty or oily hands. Cold forged in the U.S., the new pliers are a game changer.

Speaker Change #154: And they were all pocket-sized to be always at the ready, pull it out of your pocket and you're ready to go. And all designed to allow immediate access to remove low-torque fasteners in places to pull fuses, to adjust hoses, or provide some additional gripping leverage for basic repairs or just inspections.

The new unit save steps and make work easier and tight spaces, and they're offered in two handle models. A cushioned grip addition to reduce hand fatigue and for the first time are bare metal diamond plate texture that provides a superior grip. So even with sweaty or oily hands, cold forward cold forward to the US the new pliers are you know a gang changer and the rollout was a huge hit, making our million dollar hit product status just during the initial launch launch. Well, that's the tools to pivoting to technicians' preferences, producing innovative quick paybacks, making work easier, new tools matched to the task and guided by customer connection, bringing quick value to the text. You can see the value play out in the gross margins that bringing quick value to the text.

Speaker Change #154: The new units save steps and make work easier in tight spaces and they're offered in two handle models, a cushioned grip addition to reduce hand fatigue.

Speaker Change #154: And for the first time, our bare metal, diamond plate texture.

Speaker Change #154: that provides a superior grip even with sweaty or oily hands. Cold Forged in the U.S., the new pliers are a game-changer. And the rollout was a huge hit, making our million-dollar hit product status just during the initial launch. Well, that's the Tools Group.

Nicholas T. Pinchuk: And the rollout was a huge hit, making our million dollar hit product status just during the initial launch. Well, that's the tool, pivoting to technicians and producing innovative, quick paybacks, making work easier; new tools match to the task and are guided by customer connection, bringing quick value to the tech. And you can see the value play out in the gross margins, bringing quick value to the text. And you can see that play out in the gross margins, almost flattening them out.

Speaker Change #156: Pivoting to Technicians' Preferences.

Speaker Change #156: Producing innovative, quick paybacks, making work easier, new tools matched.

Speaker Change #157: To the task and guided by customer connection. Bringing quick value to the text, to the text, and you can see the value play out in the gross margins. Bringing quick value to the text.

And then you can see that play out in the gross margins almost flattened down turn. You can also see, I think, our unwavering support for the franchisees in the operating expense. It was about flat, even in the turbulence, even in the downturn, even with the lower sales. We will maintain our training, our programs, and our efforts in the field, even in this turbulence. You see we believe the uncertainty will receive received and we want the network to be strong and fully loaded when that occurs.

Speaker Change #157: And you can see that play out in the gross margins, almost flat in the downturn.

Nicholas T. Pinchuk: You can also see... waving support for the franchisees and the operators. It was about flat, even in the turbulence, even in the downturn, even with the lower sails. We'll maintain our training, our programs, and our efforts in the field. Even in this.

Speaker Change #157: You can also see, I think...

Speaker Change #157: are on wavering support for the franchisees in the operating expense.

Speaker Change #157: It was about flat, even in the turbulence, even in the downturn, even with the lower sails.

Speaker Change #157: We'll maintain our training, our programs, and our efforts in the field.

Nicholas T. Pinchuk: You see, we believe the uncertainty will recede, and we want the network to be strong and fully loaded when that occurs. Now for our Group sales of $458.8 million in the quarter, representing a $4.3 million, or 1% organic increase that was partially offset by $1.5 million of unfavorable foreign currency translations. Those gains reflected higher activity with OEM dealerships attenuated by lower sales in the diagnostics division. The OI margin was an even 25%, rising 60 basis points, and among the group's best.

Speaker Change #157: Even in this turbulence.

Speaker Change #157: You see, we believe the uncertainty will recede, and we want the network to be strong and fully loaded when that occurs.

Now for our tonight group sale of 458.8 million in the quarter, representing a 4.3 million, a 1% organic increase that was partially offset by 1.5 million of unfavorable or in currency translations. Those gains reflected higher activity with OAM dealerships, attenuated by lower sales in the diagnostics division. The OIM margin, it was an even 25%, rising 60 basis points and among the group's best. The numbers reflect the strengths of our SNI products and programs for repair shop owners and managers as we help them match the evolving challenges of the modern car park. Speaking of the product evolutions in our progress with OEM programs, the traditional method of lifting vehicles is becoming more complex with the onset of new hybrid and EV platforms. The batteries require changes and lift points to adjust for the different center of gravity on EV and to complicate the matter.

Arsenae: Now for RS&I.

Speaker Change #159: Group sales of $458.8 million in the quarter representing a $4.3 million or 1% organic increase that was partially offset by $1.5 million of unfavorable foreign currency translations.

Speaker Change #159: Those gains reflected higher activity with OEM dealerships attenuated by lower sales in the Diagnostics Division. The OI margin was an even 25%, rising 60 basis points and among the group's best.

Speaker Change #159: The numbers reflect the strength of RS&I products and programs for repair shop owners and managers as we help them match the evolving challenges of the modern car part.

Speaker Change #159: Speaking of the product evolutions and our progress with OEM programs, the traditional method of lifting vehicles is becoming more complex with the onset of new hybrid and EV platforms. The batteries require changes in lift points to adjust for the different center of gravity on EVs. And to complicate the matter...

Each model design presents a different problem. In response, we design steel floor plates matched to particular models that service guides and position the vehicles in the exact location that puts the lift arms in the proper place for that vehicle, enabling a safe procedure and an easy lift. The OEMs and the shops, they enthusiastically see the innovation as another and a long line of the modifications needed to match the evolving car park. They need to facilitate to match that change, and we're helping them do it. Another successful R&R SNI release was the ProCut X1HD on vehicle brake lathe, specifically for heavy duty platforms like buses, fire engines, and semi trucks.

The lathe cuts away imperfections and abrasions on a brake's rotor v imperfections and abrasions on a brake's rotor surface that always arise during regular operations. The result is a fully restored component that supports optimized brake performance without the need of a replacement. The previous choice for heavy duty brake repair work was to disassemble a brake assembly and either order new parts or smooth the rotor around a stand-alone bench lathe. In either case, a laborious process. The new ProCut design avoids both the time and the effort to lift the heavy components off the vehicle, and it eliminates the cost of new parts.

We believe it's another game changer. The ProCut design will become the industry standard. Also in R&R SNI, a car aligner serves the vehicle collision market, serves the vehicle collision market with a number of heavy duty items. A good example during the quarter is the release of a low profile frame bench, innovatively designed for holding the workpiece at an optimal height, making it easier for technicians to interact with the damaged vehicle. The bench is rugged for heavy collision work and integrates with our existing pulley solutions that stretch and contort the chassis back into position. The ability to raise and lower the bench in multiple positions while still engaging with the vehicle reduces fatigue with the user and makes the process much easier.

The collision space is quite robust. Turned by the changing vehicles and car aligner has been on a continuing positive trajectory, and a new bench makes our advantage of that market even stronger. R&R SNI, expanding its reach with shop owners and managers, confronting the increased complexity, focusing on developing innovations that simplify the difficult and health shops prosper along the way.

Press for along the way. Well, those, the arsenic quarter was quite strong.

Well, those are the second quarter results. Tools group down, impacted by uncertainty, pivoting the customer preference, launching new product, holding the gross margins and maintaining the network. CNI and Arseni, providing the multi-sector power of customer connection and new product, recording strong profitability, balancing the headwinds of technician uncertainty and the overall corporation, launching a broad range of products from tapered sockets to industrial power tools to collision benches. Sales about flat, OI margin 23.8%, 22.8% excluding the legal benefits, one of our highest. An EPS $5.07, 491 excluding the legal item, setting a new high. Performance achieved against the wind; it was an encouraging quarter.

Now I'll turn the call over to Aldo. Aldo. Thanks, Nick, our consultant has offered any results to summarize on slide six, net sales of $1,179.4 million in the quarter compared to $1,191.3 million last year, reflecting a 1.1% organic sales decline in $5.7 million of unfavorable foreign currency translation, partially offset. By $7.3 million of acquisition-related sales. Sales activity was similar to what we experienced in the first quarter, while our franchise van channel revenues continue to be dampened by afflicted technician confidence. Our sales repair shop owners and managers again increased year over year. Encouragingly, activity with customers serving the critical industries remained robust.

Consolidated grows margin of 50.6% compared to 50.7% last year, reflecting the lower sales volumes largely offset by savings from the company's RCI initiatives. Operating expenses as a percentage of net sales of 26.8% compared to 27.4% last year. In the quarter, as noted in our press release, operating expenses included an $11.2 million benefit for the final payments received associated with the legal matter. The 60 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payments, partially offset by the effects of lower sales volumes. Operating earnings before financial services of $280.3 million in the quarter, including the benefit from the legal payments, compared to $277 million in 2023.

As a percentage of net sales, operating margin before financial services of 23.8%, including a 100 basis point benefit from the legal payments, compared to 23.3% last year. Financial services revenue of $104.5 million in the second quarter of 2024, compared to $93.4 million last year, while operating earnings of $70.2 million compared to $66.9 million in 2023. Consolidated operating earnings of $350.5 million, which includes the legal benefits, compared to $343.9 million last year. As a percentage of revenues, the operating earnings margin of 27.4%, including the legal payments, compared to 26.8% in 2023. Our second quarter effective income tax rate of 22.6% compared to 22.9% last year.

Net earnings of $271.2 million or $5.7 per diluted share, including an $8.7 million or $16 per diluted share after tax benefits from the legal payments, compared to $264 million or $4.89 per diluted share in the second quarter of 2023.

Now let's start to our second results for the board. Starting with the CNI Group on slide 7, sales of $372 million compared to $364.2 million last year, reflecting a 1.2% organic sales gain and $7.3 million of acquisition-related sales, partially offset by $3.8 million of unfavorable foreign currency translation. The organic increases primarily due to a double-digit gain in sales to customers in critical industries, partially offset by low single-digit decline in the segments European-based handfuls of business and a double-digit reduction in the power tools operation to land or mostly associated with lower inter-segment sales. With respect to critical industries, defense-related sales were strong as it wasn't activity in the aviation sector.

Gross margin approved 220 basis points to 41.7% in the second quarter from 39.5% in 2023. This was largely due to the increased sales volumes in the higher gross margin critical industry sector, savings from RCI initiatives, and 50 basis points of benefit from acquisitions. Operating expenses as a percentage of sales rose 150 basis points to 25% in the quarter from 23.5% in 2023, primarily due to investments in personnel and other costs, and a 60 basis point impact from acquisitions. Operating earnings for the CNI segment are $62.2 million compared to $58.1 million last year. The operating margin of 16.7% compared to 16% in 2023 and represented a new milestone of achievement for the segment.

Turning now to slide 8. Sales in the Snap-on-Tools Group of $4.8 million compared to $523.1 million a year ago, reflecting a 7.7% organic sales decline in $800,000 of untaverable foreign currency translation. Analogist of the last quarter, the organic decrease reflects a high single-digit decline in our US business, partially offset by a low single-digit gain in our international operations. Gross margin of 48.8% in the quarter declined 20 basis points from 49% last year, and that's primarily due to sales lower sales volumes. Operating expenses as percentage of sales rose 230 basis points to 25% in the quarter from 22.7% in 2023, largely due to the effects of lower sales volume.

Operating earnings for the Snap-on-Tools Group of $114.8 million compared to $137.7 million last year, the operating margin of 23.8% compared to 26.3% in 2023.

Train to the R&I Group, showing slide 9. Sales of $454.8 million compared to $452 million in 2023, reflecting a 1% organic sales increase partially offset by $1.5 million of untaverable foreign currency translation. The organic gain includes a high single-digit increase in activity with OEM dealerships, partially offset by a mid-single-digit decline in sales of diagnostic and repair information products to independent repair shop owners and managers. Those margins improve 50 basis points to 45.5% from 45% last year, primarily due to savings from RCI initiatives. Operating expenses as a percentage of sales of 20.5% improved 10 basis points from 20.6% last year, and the operating earnings for the RSNI group of $113.6 million compared to $110.4 million last year.

The operating margins of 25% compared to 24.4% reported last year.

Now, 30 to slide 10. Revenue from financial services increased $7.1 million, or $7.6%, to $100.5 million from $93.4 million last year, primarily reflecting the growth of the loan portfolio. Financial services operating earnings of $70.2 million compared to $66.9 million in 2023. Financial services expenses were up $3.8 million from 2023 levels, including $3.5 million of higher provisions for credit losses. Sequentially, the provision for credit losses was lower by $1.3 million. In the second quarter of 2024 and 2023, the respective average yields on financial receivables were 17.7% and 17.6%. In the second quarter of 2024 and 23, the average yields on contract receivables were 8.9% and 8.6%, respectively.

So the loan originations of $308.1 million in the second quarter represented a decrease of $18.2 million or $5.6% from 2023 levels, primarily reflecting a high single-digit decline in extended credit originations, partially offset by higher originations of contract receivables. Consistent with the sales activity and the SNF on tools group, extended credit originations of the U.S. declined and were only partially offset by growth in originations international. Over to $11 million. Our quarter and 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 1.6% is up, 30 basis points from the second quarter of 2023, but down 20 basis points sequentially from the 1.8% report to last quarter. Trailing 12 months net losses with the overall extended credit portfolio of $58.6 million represented 2.9.4% about standings at quartering. Considering the current environment, we believe the delinquency and portfolio performance metrics remain relatively stable and are consistent with pre-COVID era experience.

Now turning to slide 12. Cash provided by operating activities of $301.1 million in quarter represented 108% of net earnings compared to $270.3 million last year. The increase as compared to the second quarter of 2023 largely reflects decreases in working investment and higher net earnings. Net cash used by investing activities of $60.2 million primarily reflected net additions to finance receivables of $41.2 million and capital expenditures of $23.2 million. Net cash used by financing activities of $127.9 million, including cash dividends of $98 million, and the repurchase of $174,000 shares of common stock for $47.4 million under our existing share repurchase programs. As a porter end, we had remaining availability to repurchase up to an additional $271.1 million of common stock under our existing authorization.

Turning to slide 13. Trade and other accounts receivable decreased $7.8 million from 2023 year-end. Day sales outstanding of 60 days were unchanged from year-end. Eventories decreased $40.9 million from 2023 year-end. Trailing 12-month basis, inventory turns of 2.4 compared to 2.3 year-end 2023. Our quarter-end cash position of $1,232.7 million compared to $1.5 million 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 a quarter-end, there were no amounts outstanding under the credit facility, and there were no commercial paper volumes outstanding.

That concludes my remarks on our second quarter performance. I'll now briefly review a few of the items for 2024. For the full year, we expect that capital expenditures will be in a range of $1.0 million, $110 million, and we currently anticipate that our full year 2024 effective income tax rate will be in a range of 22-23%.

I'll now turn the call back to Nick for his closing thoughts. Nick. Thanks, Alba. Wow. That's our second quarter. A period of continuing turbulence born out of the uncertainty in the grassroots detects. On certainly on the near-term environment, customers, techs that are cash rich and confidence poor. But it was also a period where our value creating mechanism, observing tasks right in the workplace, connecting with customers, and translating the insights and innovation that can make critical tasks easier, where that core of our business model demonstrated that its efficacy stretches well beyond our traditional technician customer base, and it does so quite profitably.

There was an interlude in which our snap-on valuation processes showed its on-crawling strength, particularly visible in the tools group, where it drove product value and operating efficiency that buttressed gross margins that stayed close to flat despite the lower volumes. And it can see that written all across the quarter. The tools group, an uncertainty-driven decline in volume, continuing and unreduced support for its franchise network, but with profitable quick payback products and RCI keeping gross margins at reasonable levels, offsetting some of the volume impact. RS and I, seizing the opportunity to help shop owners and managers, matching the rising vehicle repair complexity and doing it very profitably, achieving an OI margin at 25 percent, one of its best.

CNI rolling out of the garage in critical industries, overcoming the recessions in Europe and the turbulence in Asia to grow on each theater, continuing the upward trajectory of its customized kidding business, driving expansion in critical industries, and achieving an OI margin at 60.7 percent, up 70 basis points. It's highest ever. And it all came together for a positive performance for the overall enterprise, sales, about flat against the uncertainty. OI margins, 23.8%, 22.8%, excluding the legal payment, one of our very strongest, an EPS $5.07, $4.91 without the legal payment, the highest for any Snap-on quarter. It was an encouraging period.

And we believe that with the strength of our business model, with the opportunities inherent in our broad markets, and with the considerable and hard-won experience of our team, Snap-On will remain resilient in the turbulence. Making the most of its abundant possibilities on our markets, and will continue to advance, making progress through 2024 and well beyond. Now, before I turn the call over to the operator, I'll speak directly to our franchisees and associates. I know a lot of you are listening. The strength Snap-On has demonstrated in the turbulence and the associated advantages we carry into the days ahead have been created by all of you.

For the considerable capabilities, you bring to bear every hour; you have my admiration. For the significant success you've achieved in the quarter, and for many periods before, you have my congratulations. And for the unwavering belief you hold in the future of our team, you have my thanks.

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

And we will now begin the question-and-answer session. To ask a question, you may press star-in-one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To restore your question, please press star-in-two. And at this time, we will pause momentarily for the first question.

And our first question today. Welcome from Luke Young with Baird. Please go ahead. Good morning. Thanks for taking the questions, Nick. To start with, just hoping we could get an update on the facility expansion projects that you have going on right now, both kind of progressing commandingly, timing, and then, you know, how things are progressing versus your expectations, and to what extent you can leverage that to pivot the mix and, you know, really focus on those quicker paybacks. I think that folks are looking forward to that. I was just concerning what the art facility expansion, I think, with the walk-in.

Okay, facility expansion, I can talk about that. Look, I'm going to add it to some space that's in place. They're starting to use it now. Now, the thing is you use it, but you figure out how to be more efficient. So just because it's in place, and you're in the saddle, doesn't mean it's going to work at high efficiency. But that's creating some, breaking some bottlenecks out there and allowing us to build things like, you know, we're bringing out a new work bench. You know, we're bringing out a three-six inch, a small, epic toolbox that's smaller than we ever saw before.

And we've had before, and therefore, it's a lower price situation. You know, in other words, quicker payback items. So that's working. In a Milwaukee, we're expanding 25%, and we've expanded the machining area. Some of the machines are in. We're still delivering others because they were ordered, frankly, to adjust to the pivot. So we've had partial expansion of some of our flexible socket impact lines, and also some of our bit lines. And so that'll be sort of developing through the expanding and getting better and bigger during the quarter. And as we move out, we'll get more and more efficient.

And then we're building probably for the fourth quarter and first quarter; we're building the more capacity into the plating line up there because we expanded. In Elizabeth, in another hand, that's where we make the wrenches and hot forge them. We've expanded the plating line already there, and that's up and operating. And we're putting more machines in there to fill another expansion, to build more effective wrenches, you know, using cold forming to reduce the, the neural net shape, and raising our capacity for those, for ratchets in that situation. And we're expanding our adjustable wrench capacity down there because it's in demand, and we can't build enough of them.

So you have, though, that'll give you some examples, I think, in terms of outgoing. And it's a, I think outgoing increases by about 25%. The Milwaukee increases by 25%. And outgoing is the 30%, and Elizabeth, and will be 35% at the end. So, and then, so they're all in place. Some of it is working; some isn't. But what it has done is it broken some of the difficult workarounds we've had in the places. So part of the things you see in gross margin is some of the efficiencies that are coming out of the already, you know, partial expansions being completed and up and run.

That's very helpful. Could you maybe come in on tool storage specifically in the quarter neck? We saw the benefit, I think already in the first quarter of you having the capacity in place and in fluxing it, like you just spoke to. Did the growth continue in the second quarter? The product line, every product line in this quarter was more balanced. Every product line was down, sum in the quarter. And big ticket, you saw the originations. I think the originations were down more originations, you know, which is a surrogate for big tools up for big ticket sales.

And the longer payback sales was down more than the tools group was down in the quarter. So the big ticket items were a smaller percentage of that. Now that was led. Diagnostic was probably the big player in that because diagnosis was comparing to a launch of the Solace Plus last, you know, set quarter last year. So a non-launch quarter has, you know, you know, you can have different comparisons with that in this quarter like this with a launch quarter. But generally, tool storage, if you're talking about the efficacy of tool storage, one of the things this is doing is allowing us to sell and pivot to provide people the accessories, the benches, the carts that technicians are more receptive to in this situation.

So that will accrue to us. You know, it's a question of how quickly we can get that burned into the Algona production process. It's working a little bit now. But in the quarter, technician uncertainty, I think, was a little higher in this quarter. So you probably, like you might see the conditions are a little more uncertain. And so I think Big Ticket was down again. And then lastly, just, you know, given on certainty in terms of, you know, tax right now, do you meter or change your approach to the SFC at all this year just in terms of promotions and positioning, and could it be maybe a venue to refine your approach in this more unsettled environment kind of exiting this year into 25 think?

Yeah. I mean, the thing is, yeah, not the overall thing. The overall thing is the, the SFC is three purposes. You know, maybe four. One is to have a training seminar. We're going to train the heck out of things, you know, things we think need train. Some of those are smaller ticket diagnostic units; some of them are, some of them are hand tools and so on. So we're working on those things. In the SFC, we're going to continue that because we're going to continue to support. Like I said, we want to be at first time fully loaded when we only come out of this, this difficulty with the tools group in our network.

And then we have kind of, you know, a tool show, which is several football fields, and you want to let the people touch the tools. And that's where we'll have some change because we'll be trying to emphasize the quicker payback items, which we think that technicians want. For example, one of the warm-up promotions for the SFC was the Super 7, which is filled with the hand tools, wrenches, ratchets, hammers, and torque units. And it didn't go pretty well. You know, it did get subscribed almost as a sell-out. So we're going to try to push in that situation.

So we'll be trying to emphasize by physical presentation and by verbal urging the idea of quicker payback items, not completely neglecting tool storage or diagnostic in that situation. And then, you know, the other thing about the, about the SFC. You need the SFC, I think, because you don't touch your franchisees that often. And we all want to give them a message and, you know, reinforce that they have enlisted their economic future with a strong and robust business. We'll leave it there. Thank you.

And our next question will come from Bret Jordan with Jefferies. Please go ahead. Hey, good morning, guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. Well, remember that that's characterization. We are strong in the dealerships because the OEM programs have been strong in order to change the idea that was the purpose of the list discussion with the EV. Is that really the OEMs are calibrating up or raising their game to match the different drive trains and the more autonomy? And the OEMs are launching programs to do that. And either associated with new models and new capabilities like demonstrated in a list.

So you see that, and that is marking that business grew again high single digits in the quarter. So that is bowing is underpinning that and also it's around the some of the software in that business with our electronic parts catalogs. Now if you pivot it's a little more complicated situation with the independence because flowing through Arsenae is the diagnostics they have the diagnostics division because of the dependence on the information basis which are integral to other Arsenae products. So diagnostics was like big ticket was down in the tools group, so that drag down some of the Arsenae volume.

If you look at Arsenae and CNI, both sell to the tools group, power tools and CNI diagnostics in Arsenae. If you look at them, they were up, I think the number was 1% organically at Arsenae, 1.2% organically in CNI. But if you looked at it externally, excluding sales to the tools group, internal sales CNI was up 3.9% organically and Arsenae was up over 4%. And so it is a little more complicated description of that we've described it that way based on the efficacy of the actual reported numbers. So we do see some progress in independent shops, particularly with our direct sales business.

You see one of the things that is happening in Arsenae coming out in Arsenae is that when we can get up and sell directly to the customer with our I think really strong product line employed, we do pretty well. But a part of that business goes through distributors, and when they go through distributors, we're seeing a pull-off of that business we saw particularly in some of the Arsenae businesses. So I don't think it's the independent shops; I think it is the distributors themselves, or maybe a little white-knuckle at this time and maybe taken down some of the remuntories, some of those distributors.

So you're seeing that over, and it's kind of a complicated by only some rise. We're doing pretty well with the dealerships. We're doing well selling to direct independent shops, which means they're doing pretty well. They're doing their still robust, but the intermediaries are a little bit more reliable. Got it. That's helpful. And then within the tools group, could you talk about how pricing compared to units during the quarter or maybe just additional color around how successful these lower payback items are and improving volumes and how that mix is affecting things? Well, the price for units a lot lower.

So you've got to sell a lot more wrenches to make up for a tool storage box. That's pretty important, and I can weigh on your volume, but I would offer to you. You need to look no further. Oliver, then Gross margin. Gross margin down 20 basis points with a, what was it? 7.7% organic sales down? Gross margin down 20 basis points. How does he think that happens? Well, it happens because the new tools are bringing out. The new wrenches, you know, the new tools were bring it out. They are selling at good margins. That doesn't mean we're pricing the existing businesses, but a lot of these new tools, and a lot of them are rolling out.

We got wrenches and ratchets and extensions and adapters and things that are specially made like the, the E-series and the Super Duty trucks we talked about. People are willing to pay big premiums for that kind of stuff, and it's playing out in the gross margins. Part of the, part of this is pretty well. And we kept spending at lower volumes. We didn't back off of the, of the, of the SG&A supporting the franchisees. So, in effect, we could have blunted the volume even more if we didn't want to, if we didn't believe that the stun is coming out again and we want to be at full strength.

So those are the, those are the bounces. Gross margin is a big set. If you look at the gross margin overall of the corporation, CNI is up 220 basis points. The, the, the arts and I is up 50 basis points. The overall corporation is the 50.6% only down 10 basis points. So what you're seeing in our financials are, boy, we're still, we're still pretty robust. That's why I love the idea of CNI and arts, and I bowing up the turbulence of the tools group because you can look at the overall business. You say, hey, you know, the, this, this business at the gross margin level looks pretty healthy.

Great.

That's all for us. Thanks, guys.

And our next question will come from Gary Prestopino with Barrington Research. Please go ahead. Hey, good morning, everyone. I just wanted to address the corporate expenses look like they were down, and I would assume that's the impact of the legal settlement, right? Yes, except down, I don't know, like what, 18 million or something like that. Maybe it can change. Okay, this pains me to tell you this. It pains me dearly. You've got 11.2 million, I think, for the legal settlement. Right. And you've got a million in change for reduced management stock-based compensation and bonuses estimated for the yield.

So it hurts me to tell you that on this, on this call. But in fact, that's a different in this quarter. All right. And I could also see the stock comp was down. And I guess what I'm getting at is that looking forward in the back half of the year should it be something without the impact of any legal settlement? Should it be somewhere between 20 and 25 million a quarter? I'd more to top into that. I would think more of the top end of that, actually. Okay. All right. That's what I think.

You know, the other question I want to ask you is, you know, quite obvious that there's a slow down here and the buying of diagnostic equipment. Some of it deals with the fact that you just had a great year last year. But when does it get to the point where the technician or the shop starts falling behind, if ever, if that occurs really with not upgrading their diagnostic product? And my understanding is that with these products, it really speeds up your production of being able to repair cars. So does that start coming into play here as we work deeper into this?

Sure it does, sure it does. I think this is a thing. I think you got two things going on. One, I hate to say the comparison, but it is true that we launched a new product last second corner, and you're comparing against that. But you also have the technician's clear aversion for bigger ticket items. They don't want it there. They're less likely. You can hear it in broadly in the originations. You know, they're gravitating toward other things. I was with franchisees and garage owners in Syracuse and Atlanta, and I had all the regional guys in here, and I was watching them for probably longer than they wanted to be questioned.

And they also said the same thing. People are starting, you know, they're just worried. There's a fear in the situation where they're going. So they don't want to get embroiled in paying back over years as much. They're a little more conservative about them. They're not probably spending. So you see that. But your overarching point is quite true. Eventually, people have to say, "people do say, boy," and it's like this. You know, you can, the car nowadays, you still have to fix the car by sound. Now you have to look at the mostly people have to look at the trouble codes and try to discern what the trouble codes mean.

And then try to think. And that's what scanners do. They tell you what the trouble codes are. Those are the simpler and competitive diagnostic units. But ours, when we confirmed in the legal settlement, we have a proprietary database that will take those data points, those trouble codes, and decode them, telling you what's actually wrong with the car. Right now, the previous that, if you can only scan, you have to figure that out for yourself. Our database will put you right on target. So eventually, as the cars go up in complexity, people aren't going to be able to, just like they haven't been able to read now, they're not able to read the, even get an idea about the car, even start without knowing what the trouble codes mean.

In the future, they're going to have to be able to decode the trouble codes because it's going to get even more complex, and you see that weighing on the situation. And so we expect that to all figure out that all come out in the next, you know, the next, you know, over the next period, you know, we'll be launching new diagnostics, which will have new hardware and our software keeps getting better. Now, one of the things we do see, the areas supporting your point, is people who have diagnostics really fall in love with them. And so they want to update their software.

Our subscriptions are going up. Part of the reason why the tools we was able to hold, it's margins is because it's software content is moving up. Awards. So people value it, but eventually they're going to want new hardware. Okay, thank you.

And our next question will come from David MacGregor with Longbow Research. Please go ahead. Good morning, everyone, and thanks for taking the questions. Hey, good morning, Nick. Let me just ask you about sort of the second half and expectations here. I mean given second quarter negative organic growth and Snap-on tools, does that suggest kind of second half growth should be negative as well? And I mean 2Q was not a challenging compare. And so I guess I'm just wondering how much forward visibility you have given the truck inventory levels and pre-SFC order growth? Well, I don't know.

I think I think I wouldn't have said that Q2, Q2, Q2 last year was down. You know, it wasn't down, it wasn't capital, let's say. So it wasn't in that space; it wasn't as strong. But if you look back, if you look sequentially, the movement between the first quarter and the second quarter isn't that much different in last year versus this year. So it's not so inconsistent. It isn't like that's a big difference. If you're talking about the second half, boy, there's a lot of things going on. One is that for some time. So it's hard to judge what the second half would be like.

You're not going to get me to say that it'll be negative in the second half because we have plans; we think provide some overcoming to that. And for some time now, for several quarters, the sales off the van have been bigger than the sales to the van on a year-over-year basis. Now we saw some of that change toward the end of the quarter. So I don't know where it's going to go. If you want to look at it, so from a, from a, I would say when you look at it from an operational point of view, you know, you think sooner or later this is going to have to play out more positively.

But then, when you look at uncertainty, your guess is as good as mine about how the uncertainty is going to play out. It seems to me, as though, like I said in my, my, my remarks, the hits just keep on coming. And so does anybody think if you, if you look at the uncertainty in the world that it's less uncertain to, or it's the same today as it was say three months ago, I don't think so. I don't think so. And so you hear that out of the technicians. I don't know where it's going in the third quarter of the fourth quarter.

It's hard to say. But I think there's some positives that would mitigate toward positivity. The things we're doing, the product we're bringing out, the pivots we're making. But on the other hand, if you look at the macros, it's a black hole. You don't know. It's very opaque. So your guess is as good as mine in that situation. All I know is the only thing I think control is to try to do the pivots, to try to match what the, what the, what the technicians say and take advantage of every opportunity we have. And the, and the, and the message of this quarter is that ours and I and C and I show that the, the model works in those places.

And I can make a lot of money. And they provide good offsets. Right. Nick, you, you, you, uh, the operating expenses in the second quarter in the Snap-on-tools segment, the leverage. You, you characterized that mostly as volume related. I guess it sounds like you're about to lean more heavily into, you know, training and maybe advertising. and promotions, and I'm just wondering how you expect that OPEX to continue to do leveraging it? I don't know; you know, it's like a half. But happen, my view at a second quarter, you may have a different view that my view of the second quarter was, we didn't back off, we kept standing the same, we spent a little bit more.

So you continue doing that in second half? So I'm not talking that I'm going to sally forth with a lot more expenses, but I'm holding the support. Now I'm holding the support; we're doing what we do, only we're adjusting it to match the current situation. I didn't mean my comments before that we're going to open the flood dates and spend a lot more. I didn't mean that; what I meant is I'm holding. Because I thought we're doing a pretty good job of supporting before, now I think we held that in a second quarter; we'll probably do that again.

But it will be a different array versus the, you know, max to the current environment. Got it. And then can you just talk about cadence within the quarter? You mentioned a moment ago in responding to a question that your trucks were destocking right up until late in the quarter. Yeah, right. I was going to get you to talk about cadence. Please go ahead. Well, the cadence was pretty; I think, consistent throughout the quarter. I think toward the end of the quarter, we had, you know, a less destocking events, you know, in the last month or so.

So that's a positive. However, sometimes I'll tell you, David, sometimes that, well, sometimes that happens because it's the last month. So it's hard for me to interpret whether that's the last month phenomena that happens once, you know, once in a while. Not uncommonly, but not all the time. It hasn't happened recently, but it did happen. So maybe that's a positive. It's hard for us to predict that out of the one month. But I think if you go back to the quarter, it was about the same levels. You know, the relationship was about the same levels, except for them.

Yeah. And your early July experience wouldn't give you a framework for interpreting that? No, it's too early. You know, and then you got too much stuff floating through July. You know, somebody asked me, somebody asked me, not on a call, but they asked me, well, are people pulling back in early July waiting for the SFC or to respond? And we did have a, we did have, you know, like I said just a minute ago, we had the Super 7 program that rolled out. And seemed to be pretty well received with this, you know, full array of hand tools.

We gave him a great shotgun blast, the hand tools for this promotion. And that seems to get enthusiasm up. And, you know, it's pretty close to the expectation. I think it was, you know, like kind of sell out type of things or close to sell out. So, so that seemed to go okay. But, you know, that is Wayne evidence to proclaim where the world is going. It's better than poking the eye with a sharp stick, but you're not going to be able to extrapolate to, it's dangerous to extrapolate out of that too much. Now, I hope it is.

Flood days are not open. Everything is going to go well.

Happy days are here again. Last question for me.

Last question for me, if I could just on credit. I mean, what are you seeing in increase in RA transfers? And what would originations look like without the, without the RA transfers? And not really seeing. Credit penetration. The mix of activities is pretty much just similar to last quarter. So, no, they have not pivoted to RA transfers as a method of funding activity on the bands or anything like that. Great. Thanks very much, Shelton.

Sure. In our next question, we'll come from Scott Stember with Ross NKM. Please go ahead. Good morning, guys. Good morning, Spass. Nick, is there a way of trying to see how much of the tool sales decline is really just based on the fact that you still don't have the available capacity to make product? Just trying to frame that out. And if you can't do that, maybe just give us an idea of when would you expect to have all of the capacity and all the bottlenecks cleared up to make sure that you're at least making what they need?

You're thinking toward, if everything's in place, it gets better every day, Scott. You know what I mean? We get better every day in that situation because some of the capacity is in there. And some of the machines are there. Look, for example, we're 50% of the expansion we wanted in Flexback in Milwaukee. So that's helping us, but it's not enough. And so you've got to adjust for a wrench. It's not enough. You've got some of the smaller ticket tool stores, not enough. So we're getting out of those. On the other hand, it's hard for me to say how much really would play out.

I mean, that would give you that; that gives you the actual boosts. So I do think I do think you saw, you know, as you know, in the quarter, when you're selling small, when you pivot the smaller ticket items, you got to sell a lot of wrenches to make up a tool storage box. So it tends to put a call of weight on your overall revenue. So I think you saw some of that in tools with this quarter. We're trying to fill up the bucket on that, but it's going to take us a while to do.

Now, third quarter will be better than the second, and a fourth quarter will be better. And the first quarter after that will be better. So when, when, you know, the translating that into revenue and profit numbers, it's hard for me to say. You know, really hard for me to say. So I can't really put a number on it.

Great. And then just the last question. You know, when you're talking with the shops and just with your franchises, what are you hearing about how your competitors are fairing, at least at the shop level? Just try to sense if there's a good thing. Share loss or I don't, you know, tell you the truth. The shop guys or techs never really mention the competitors to me. You know, so, but I don't know. I'm a CEO, you know, so I'm not so sure they would. I don't know. But they never really, you go into the shops, you'll see, you can see.

I don't see any increased presence of the competitors. I will tell you that when I talk to franchisees, I talk to our regional sales developers. There's a wall in here for 12 hours in a room with me. They didn't mention the competition, really. You know, I think we would say that the enemies who have a mostly uncertainty and us. So we're trying to, you know, the speed at which we can pivot helps some of the problem, but the uncertainty will still lay over even when we fully pivot it. You know, so you kind of got, you kind of got that going on.

We don't, we don't see any incursion in this. Now, that doesn't mean we don't look back at this product. You know with a fine tooth comb and try to figure out, well, is it they have something we don't have to, can people say it's better? What are what are they pricing? How do they deliver? How do they support? You know what kinds of things can it do for the customer? We do it all the time, but I don't think that's part of our problem.

It doesn't appear to be. They still usually, the competitors are selling to a different customer base. Actually, got you, thanks again. Our next question will come from Christopher Glynn with Oppenheimer, please go ahead. We're just first curious about you know net cash position now the remaining repurchase authorizations the small proportion of your liquidity so you're kind of balance sheet positions in a different spot than than I've seen in past years wondering how you're thinking about that. Well, I'm bigger about it but, but you know I look I think you have to reassess how we're going forward.

I mean the thing is we I think you know our cash our view of cash you should you know going forward capital usage and the first the first ideas to make sure our business is fully funded. Secondly, as we look at the dividend, which the dividends, you know, coming up, and we have paid a dividend every quarter since 1939, and we have never reduced it. So we assess that in the sense of perpetuity. That's our guiding principle, and but we have increased the dividend. I think now every quarter for almost 13 years. This is if we increase it again, it would be the 14.

I'm not giving any insight information about whether we're an increase or go flat or anything. But we'll be looking at that pretty carefully. Then we have acquisitions, which we're constantly looking at, and you know, did you hear the story before that we have this landscape? In fact, we have guys out as we speak looking at other acquisitions, and I don't know if they'll play out or not because we're careful with our money. And then we have stock buyback, which you already pointed out has an authorization now that's a little bit less than it was before, and so we'll have to assess that as we go forward. That's all I'm thinking of it really. Okay, and my follow-up just back to SOT, I'm curious if there's any interesting geographic dispersion. We've got a big country here, lots of regions, different economies to a degree. On the incremental weakening, you see in any kind of dispersion in the regions? Well, I can I can tell you this: in the last six months, I've met with franchises and customers in almost, you know, like in the Midwest, in the east, just recently in Syracuse and Atlanta and the Southwest, and there hasn't been that much difference.

That's one of the scratchers. You know, I think this uncertainty we saw this before. I do think the grassroots economy is impacted by the uncertainty broadly, and the text may be among. Maybe the texts are special because car repair continues robust. So, there are a lot of people are confidence poor, but the texts are also cash rich in that situation. So that may be part of the issue. I don't see much. And I talked to our regional guys, you know, all nine regions or any area, you know. And yeah, there's some differences. And we try to look at those differences and try to figure out maybe should we facilitate more?

Are those operations different? We haven't been able to come up with much, actually. So I don't see much difference. Even though you would say there would be, you don't really, you get the same story from texts everywhere. You think Texas did get hit with more regulatory and compliance costs? The texts, I don't, I don't, I don't, I don't know, I don't think the text, the garages maybe. The garages might get more regulatory compliance costs. I don't think the texts so much. They don't mention it so much. I mean, the financial, social, and manufacturing goes wild over regulations, you know.

They talk about how much of cost they save for every small manufacturer. So every small manufacturer has to pay $35,000 per employee per year in regulation costs. So I think by extension, you would say small businesses like garages would have that problem. But I don't think texts would be burdened with it. Thanks, Nick.

Sure. And our next question, welcome from Tom Hays with CL King. Please go ahead. Thanks, guys. Appreciate you fitting me in. Just quickly, Nick, maybe any kind of you could provide that what you're seeing on the positive side on the critical industries. I think you guys called it out as a bit of a bright spot. Is there anything maybe on avionics or military or natural resources that stands out? You mean, booming as it is, is that the, yeah, no, the curriculum is double digits again. And, you know, if the military has been consistently strong, a cool thing is we include education in the critical industries because we believe it's critical to influence.

And one of the things about it is the education business has been up nicely. And what that says is the young people are hungry for Snap-on products. And so that's a cool thing for us. We really like that. So you see that I don't, I don't have anything in terms of why it seemed like aviation was strong this quarter. And I would expect to continue. And you'd have to believe, given the bowing situation, that customers and aviation would be pretty anxious to be able to have accuracy and documentation, which we offer in space in our product for that particular industry.

And I think that's driving some of it. I think the military is obvious. I think the military, you know, every nation is on edge. For example, you know, you have countries in Europe who are looking to double their military, and they're coming to us to help them upgrade to manage their fleet of airplanes. And so you see some of that. So I think those two, those two types of general, general trusts are working. But you also see, in a general industry, was strong. The overall industry is strong because I think the industry in this time is looking for efficiency, and repair is efficiently the quicker you can do it.

Now, the overarching thing that we're noting is that in all these industries, they're looking for customized products that will match their particular problems because the critical industries is replete with those opportunities and tasks where you have to have a particular array of products to match them. That's why the customer getting is doing so well. We almost have not many competitors in this situation as a manufacturer. So that is really working for us. And it seems like whatever, whenever we give the industrial group one way, they run as they like and take. Thank you. So I think we feel pretty good about that position, that business.

Appreciate the color; thank you. Sure.

And this will conclude our question-and-answer session. I'd 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 SnapOn.com. As always, we appreciate your interest in Snap-on. Good day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.

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