Q4 2024 Snap-on Inc Earnings Call

[laughter].

Speaker Change: Good day and welcome to the snap on incorporated Q4 full year 2024 results conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask question.

Speaker Change: To ask a question you May press Star then one unattached home phone to withdraw your question. Please press Star then two.

Speaker Change: Please note. This event is being recorded I would now like to turn the conference over to Cerro Verde skiing, Vice President of Investor Relations. Please go ahead.

Speaker Change: Thank you Alan and good morning, everyone. We appreciate you joining us today as we review snap on fourth quarter and full year results, which are detailed in our press release issued earlier. This morning, we have on the call Nick Pinchuk Snap ons, Chief Executive Officer, and Aldo probably already snap ons, Chief Financial Officer, Nick will kick off our call. This morning with his perspective.

Speaker Change: 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 as usual we've provided slides to supplement our discussion. These slides can be accessed under the downloads tab in the webcast viewer as well as on our website snap on dot com under the investors section.

Speaker Change: These slides will be archived on our website along with a transcript of today's call any statements made during this call relative to management's expectations estimates or beliefs or that otherwise discuss management's or the company's outlook plans or projections are forward looking statements and actual results may differ materially from those made in such statements additional information.

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

Speaker Change: <unk> 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 Thanks, Sarah.

Nick Pinchuk: Morning, everybody.

Speaker Change: I'll start with the highlights of our fourth quarter.

Speaker Change: I'll give you my perspective on our results on the market environment and our progress.

Speaker Change: Considerable.

Aldo: After that and as usual Aldo will move into a more detailed review of the financials.

Speaker Change: These are interesting times.

Speaker Change: Build without certainty, but snap on is built to prevail even in turbulence.

Speaker Change: Our first rodeo its our job to confronted to overcome and to proceed with confidence confidence in the resilience of our market confidence in the strength of our strategic and tactical advantages and confidence in the insight and energy of our consistent and capable people.

Speaker Change: And all of that echoed in the numbers. So here. They are overall sales in the quarter were.

Speaker Change: 119, $8 7 million 0.2 up.

Speaker Change: 0.2%, both as reported and organically returned to positive territory profitability was strong with gross margins of 49, 7% a gain of 140 basis points in the Opco Oi margin was 22, 1% an increase of 50 basis points over 2023, an all time high for the fourth quarter financials.

Speaker Change: Services earnings of $66 7 million in the quarter were lower by $1 2 million.

Speaker Change: Leading to a consolidated margin, including both Opco and financial services of 25, 5% an improvement of 30 basis points, our EPS for the quarter was $4 82 up seven from the 475% recorded last year.

Speaker Change: The results show broad gains overcoming the uncertainty another period of sequential progress wrought by record performances by both the commercial and industrial or C&I, why the commercial industrial or C&I group or and by repair systems information or the Rsi group combined with the tools group successfully pivoting to <unk>.

Speaker Change: <unk> Tec preferences, and continuing to narrow the gap versus last year.

Speaker Change: It wasn't encouraging demonstration of advantage, our resilience and our capability.

Speaker Change: But first let's speak about the markets. We believe the vehicle repair market is robust a continuing stream of new tools and data to confront the rising complexity of the modern vehicle the repair shop today dealerships or independent or independence must deal with an expanding array of challenges multiple powertrains evs plug in.

Speaker Change: Hybrid Super hybrid advanced combustion sophisticated digital system and a wide range of autonomous operations devices like adaptive cruise control Lane departure warning collision avoidance sensors self parking features it goes on and on and on.

Speaker Change: And the list is getting longer.

Speaker Change: And technicians have to fix it all addressing a dizzying array of procedures.

Speaker Change: It's daunting, but this is where snap ons shines scanning diagnosing guiding at fixing enabling the text.

Speaker Change: Making enabling the techs, making the difficult task easier.

And when combined with an aging car park, but now averages 12 six years and includes a multitude of technology generations, all needing to be fixed.

Speaker Change: Driving even more complexity and requiring even more tools and more data.

Speaker Change: It represents even more opportunity.

Speaker Change: We love it.

Speaker Change: Vehicle repair several slides so let's start by focusing on the shops.

Speaker Change: The dealerships and independent shops, adjusting to the complexity often required often requiring things like meaning lifting equipment to handle the increased weight of evs tire changes that accommodate larger wheel sizes software suites for managing the shop for organizing parts data into streamline catalogs for scheduling repairs and customer interface.

Speaker Change: And for guiding the text to the most sophisticated are complicated of repairs. This is where <unk> operates.

Speaker Change: It's a target rich environment for our array of under car in collision equipment, and it's a growing market for our software and data products and snap on is well positioned with our innovative hardware, but especially with our proprietary comprehensive database billions of insightful records advantages that we built the advantage that we believe makes snap on the data king and vehicles.

Speaker Change: Repair.

Speaker Change: Our position that I think youll see was reinforced again by a quarter by a rising gains in that arena.

Speaker Change: No shifts that attacks the individuals are working in our base under the Hood tour lintel wrenches hits, the touch screen apply on their skill and making and actually making the repair again this quarter or the opportunity to meet with a number of franchisees and their customers.

Speaker Change: And they all expressed their enthusiasm for the strength of vehicle repair and external data confirms that view miles up the car Park AG hospital spending on autopilot hustled spending on auto repairs higher hours worked increasing and best of all tech wages rising.

Speaker Change: I was recently in a garage and a service manager.

Speaker Change: Basically proclaim to me that the work just keeps rolling in we need more tests. It makes sense expanding complexity means more time spent on each repair and more trained professionals needed to meet the demand and keep the shops prospering.

Speaker Change: So it's clear the textile in a good position.

Speaker Change: But that doesn't make them immune to the macro uncertainty around them.

Speaker Change: Ongoing wars.

Speaker Change: Immigration disputes lingering inflation and although the elections in the rear mirror and the new team.

Speaker Change: It will be more focused on business expansion theres, a rapid fire of new initiatives tariff bombs I don't know off again actions impending shakeups and foreign ventures of many varieties up to now it's hard not to be uncertain about whatsapp.

Speaker Change: Yes.

Speaker Change: So the franchisees you know they echoed that uncertainty.

Speaker Change: And then the turbulence the technicians continue to prefer quick payback items.

Speaker Change: Ones that make work easier and cut labor times right away items like hand tools and <unk> diagnostics that can be paid off in shorter cycles and it remained cool on big ticket longer payback items like tool storage. So the tools group is continuing its pivot focusing its engineering manufacturing and it's selling to match the shift in those customer preferences.

Speaker Change: So despite some challenges in automotive.

Speaker Change: Despite some challenges.

Speaker Change: Automotive repair does remain strong and we believe we're pivoting successfully could take greater advantage.

Speaker Change: Now, let's talk about critical industries, where C&I. It takes snap on out of the garage solving Tampa consequence that require precision durability reliability and repeatability all performed in some of the most demanding in crewing of environments from clean rooms to mindset to assembly lines to building spray scripts in this market.

Speaker Change: He is very promising.

Speaker Change: Our activity in critical industries continued rising across multiple sectors aviation natural mutually general industry were all up nicely.

Speaker Change: Arena also represents our most significant international presence in those markets were mixed in Europe, U K and the southern and Southern Europe up Germany down in Asia in Asia in Asia Pacific, China weaker, but gains in gip in Japan, and South Asia. Despite.

Speaker Change: Southeast Asia, despite unfavorable currency.

Speaker Change: And gains in South Korea as well.

Speaker Change: Add that to that situations. Despite unfavorable currency. So C&I does have its challenges across the geographies and the segments, but we have made significant advantages advancements and do see substantial opportunities for tomorrow, leveraging our advantages in product and our brand and our people.

Speaker Change: I think when you see the results you realize it's working.

Speaker Change: So both the auto repair and critical industries market remain positive and we are ready and well positioned to Vance to advance on those right. It was very wide long runways at the same time, it's clear it's clear to us and I hope it's clear to you that we have more potential along our runways for improvement and as we proceed we're fortified by our snap on value creation processes safety quality customer.

Speaker Change: Innovation rapid continuous improvement or are in rapid continuous improvement or RCI, they've never been more important helping helping overcome the turbulence and offering our resilience.

Speaker Change: Especially important customer connection and innovation.

Speaker Change: That's our unique advantage standing next to working men and women observing each task matching and the insights gained with technology master developing new and innovative products that make that mix worked that makes work easier.

Speaker Change: And its considerable strength and our team is committed to continuing to wheel did with determination.

Now, let's talk about the operating groups.

Speaker Change: Start with Chile.

Speaker Change: Fourth quarter sales of $379 $2 million was an all time high represent an increase of $15 3 million versus last year and included $2 1 million in acquisition related sales a million and unfavorable foreign currency and organic rise of three 9% driven by driven by gains with customers in critical industries.

Speaker Change: Strong sales of our customized kits led the way meeting the rising demand for solutions that matches that match specific tasks. Our specialty torque division was also a clear a clear positive.

Speaker Change: Clear positive precision is becoming more essential everyday and our broad tour corporate could C&I right on target and you can see it clearly in the numbers Oi for C&I was $63 5 million in the quarter up $9 4 million or 17, 4% from 2023 and the group gross.

Speaker Change: It was up 180 basis points and the operating margin was nine.

Speaker Change: 16, 7% that was also up 180 basis points Wilder.

Speaker Change: C&I just keeps getting better.

Speaker Change: It's a great indication of our ability to roll out of the garage.

Speaker Change: Specialty torque businesses C&I is really making strides torque is hot now you know and snap on is that the party with growing away with a growing away our array of new products like our our heavy duty cordless torque multiplier, we call. It the CDMA hundreds delivering torque from 160 football's all the way up to 800 per pump just what's needed to meet the broad challenge that with my across.

Speaker Change: Mining and oil and gas and rail and heavy duty. It's a tool. It anyhow. It was a tool that was made possible by our expansion in torque.

Speaker Change: Combining the efficiencies of our nor bar gear design with the compact operation of our snap on power tool.

Speaker Change: Watering the wide range, making the delivery of high torque levels easy and safe.

Speaker Change: Enabling easy access to tight spots.

Speaker Change: New units also equivalent, especially designed transducer control for applying just the precise sports a breakthrough and its benefits for our advanced power tool called cooling system that makes it much more durable. The CPM 800 torque packs are locked into one compact tool improvements adversity versatility safety access.

Speaker Change: Variability in precision it has at all.

Speaker Change: And where the tests are critical.

Speaker Change: Already a pick it.

Speaker Change: C&I sales up customized kits and precision toward rising to new levels, all with record profitability a high a high point profitability with much more room to grow and improve.

Speaker Change: Now onto the tools group.

Speaker Change: Orderly sales of $506 6 million down, but representing progress on narrowing the gap versus 2023, the progress is evident but uncertainties uncertainties uncertainties still lingers.

Speaker Change: Hi for the tools group was the $106 9 million and $4 1 million below 2023, with an operating margin of 21, 1%, but despite the turbulence.

Speaker Change: We remain steadfast in supporting our van network, keeping its strong spending on it and that profitability was recently acknowledged by multiple publications. The franchise business review recognized us and its latest rankings for franchise satisfactorily satisfaction listing snap on as a top 50 franchise.

Speaker Change: For the 18th consecutive year.

Speaker Change: We named number one among all franchisees in entrepreneur magazine's 2024 list of top franchises for veterans.

Speaker Change: And snap on was ranked by the U K elite franchise magazine as the number one franchise in that country.

Speaker Change: A distinction we have held for three consecutive years.

Speaker Change: Now these types of rankings confirm.

Speaker Change: Fundamental strengths of our franchisees individually.

Speaker Change: And business in general.

Speaker Change: And I can tell you that this would not have been achieved without a continuous stream of new products developed through our strong customer connections inside an experienced transferred transformed and innovation approach significant advantage in a rapidly changing world. That's vehicle repair one of the latest of those editions as our Milwaukee manufactured special.

Speaker Change: <unk> Hex driver specifically designed for modern vehicles equipped with advanced driver assist systems like adaptive cruise control in the base in a side by side with the techs, making the actual prayers repairs. We saw the difficulty in aligning the radar sensors that enable that autonomous control enable the adaptive cruise control.

Speaker Change: And the work was difficult.

Removing the bumpers and the Grilles dismantling the front end of the car just to reach the workplace, a very time consuming and non value added exercise that risk damage to nearby that also was damaged in nearby parts is upon us all just the clear the pathway for the eventual repair.

Speaker Change: That observation drove the design of our new in double D M, 35% to three five millimeter hex driver featuring an extra long five and three quarter and shipped.

Speaker Change: And then an enhanced reach that that bypasses the obstructions with ease, allowing the necessary adjustments without dismantling anything.

Speaker Change: And then that newly launched two will also includes our snap on instinct ergonomic handle design, providing superior control, making it easier to execute the work with the precision required for the very sensitive of radar brackets.

Speaker Change: And double the <unk> 35, and 35 makes repairs faster easier and more profitable.

Speaker Change: And the text of notice.

Speaker Change: Also in the quarter, we launched a new lineup of hand tools based on another customer connection witnessing the difficulty of applying leverage to the to the opening of a standard combination wrench.

Speaker Change: The box in the tool was great for in hand, gauging it faster in a crowded engine Bay.

Speaker Change: Slide it right in there, but when extreme force was needed and a grip with the opposite far and was necessary. The task was extremely uncomfortable because we opened under the wrench digs into your hands.

Speaker Change: To solve the problem of our engineers designed our new X D. S. G. M. A series that combines a box in low profile head with a soft grip grip ratchet handle providing the access technicians need but enabling the maximum forced to be applied comfortably with the ergonomic Lee and contour Cushing grip handle breaking bolt free without.

Speaker Change: Wincing in pain or or or slipping off under load the new XD ESG M.

Speaker Change: If I talk about it here because it's a prime example of a fast payback items.

Speaker Change: Simple, but powerful innovation that makes work safer faster and easier and the techs have loved it making the ranch one of our million dollar hit products just since it launched a few months ago.

Speaker Change: Well, that's the tools group cut.

Speaker Change: Customer connection producing innovative products operation operations, continuing to pivot meeting the customer's preference for fast payback items, and making progress in narrowing of the gap all while keeping the network strong in a turbulent.

Speaker Change: Now for our Tonight.

Speaker Change: Volume in the fourth quarter was $456 6 million up organically, one 6% gains with both OEM dealerships and with independent shop owners for a diagnostic platforms and repair information products, partially offset by lower activity in under car equipment, our CNI operating earnings in the quarter were up.

Speaker Change: Of the $121 4 million, representing an increase of $8 1 million or seven 1% gross margins were up 200 basis points and the operating margin. The operating margin operating margin was a strong 26, 6%.

Speaker Change: Up 150 basis points from last year from the prior year the highest ever.

Speaker Change: A record and the record reflects a rise in software, but it's also evidenced.

Speaker Change: Rising sulfur, which is a great thing, but it's also evident evidence of a strong and broad RCI with the great majority of our Shanghai businesses software and hardware increasing margins by well over 100 basis points that you track a lot, we really love that kind of thing because it makes our profitability in our Mitchell one.

Speaker Change: Specialty speaking of profitability, our Mitchell one specialty software division.

Speaker Change: <unk> provides software to independent shops continues incandescent success expanding its database big data, reaching 3 billion repair records in 500 billion data points are powerful and proprietary advantage that fuels, our intelligent diagnostic platform communicating directly with vehicles translating the trouble supplying comp.

Speaker Change: Flex inductive wielding complex inductive models identifying the problem and guiding technicians to repair process, all with unprecedented speed productivity and profitability.

Speaker Change: Now we can't talk about that without talking about the Apollo plus the newest member of the intelligent diagnostic intelligent diagnostics lineup released in the late third quarter and it continues to shine, surpassing previous generations and very importantly, expanding the number of software subscriptions it's easy.

Speaker Change: And smart and.

Speaker Change: For this day and age and this time it represents a text quickest payback access to the power of snap on intelligent diagnostics, we expected it to be a winner in it.

Speaker Change: <unk>.

Speaker Change: Also in the quarter under car equipment Division released the New V 4400, commander wheel alignment machine.

Speaker Change: It's a game changer for shops because of its unique flexibility. So a lot of shops don't have space and they don't do alignments at all and send them out garages today need new equipment for matching.

Speaker Change: The equipment of that time for matching the rising vehicle complexity. For example alignment has never been more important.

Speaker Change: But where do you fit the new units without a corporate expansion and then manage that in many cases, the billings are already landlocked and shop owners can't sacrifice in everyday repair bay for periodic but necessary profitable and profitable alignment procedures. So the answer is the <unk> 4400.

Speaker Change: <unk> Smart modular system, it's got an innovative design with a control center housed in a small toolbox that wirelessly connect with the.

Speaker Change: The two <unk>.

Speaker Change: When independent mobile power that hold sophisticated for cameras that hold a sophisticated sports camera setup. The sectors. Those sections can easily be stored out of the way, while not inaction and can be assembled anywhere in the shop quickly delivering.

Speaker Change: Alignment capability as needed and on command, regardless of the lay out whether youre sharpish, it's short or wide or deeper narrow it doesn't matter.

Speaker Change: And our proprietary software with our based on our four camera systems enables a very quick setup. So therefore setting it up is pretty easy and quick.

Speaker Change: And no shop is perfect. So our system also automatically eliminates imperfections like on level lifts or uneven floors, ensuring an accurate straight as an arrow alignment the beep beep.

Speaker Change: <unk> 4400 alignment Aligner is nimble versatile quick and smart.

Speaker Change: And it makes profitable alignment possible and many more shops.

Speaker Change: It's a great product.

We could we keep driving to expand <unk> position with repair shop owners and managers offering more new products all developed by our value creation processes and we're confident it's a winning formula.

Speaker Change: And the Q4 results.

Speaker Change: Say it so.

Speaker Change: Well that's the quarter.

Speaker Change: Sales up.

Speaker Change: Two 2% back to level optical operating margin of 22, 1% up 50 basis points, a new all time high for the fourth quarter, the tools group down, but narrowing the gap. The pivot is working our C&I operating margin of 26, 6% up 150 basis points. Another profit high for an already high margin group.

Speaker Change: C&I operating margins up 70 operating earnings up 17, 4% operating margin of 16, 7% up 180 basis points also at a high resilience balance at vantage and results.

Speaker Change: It was an encouraging quarter.

Speaker Change: Now I'll turn the call over to Allo allo, Thanks, Nick our consolidated operating results for the fourth quarter are summarized on slide six.

Speaker Change: Net sales of 1 billion $198 $7 million in the quarter were slightly above the 1 billion $196 6 million reported last year, reflecting an organic sales increase of $2 million contingent strength in sales to customers in critical industries as well as gains with repair shop owners and managers offset the marginally lower sales of our French.

Speaker Change: <unk> been network.

Speaker Change: Gross margin improved 140 basis points to 49, 7% from 48, 3% last year, reflecting increased sales and higher gross margin businesses as well as benefits from the company's RCI initiatives.

Speaker Change: Operating expenses as a percentage of net sales rose 90 basis points to 27, 6% from 26, 7% in 2023, primarily due to increased corporate and other operating costs.

Speaker Change: Operating earnings before financial services of $265 $2 million in the quarter compared to $257 $9 million in 2023 as a percentage of net sales operating margin before financial services of 22, 1% represented an improvement of 50 basis points from the 21, 6% reported last year.

Speaker Change: Financial services revenue of $105 million in the fourth quarter compared to $97 $2 million last year, while operating earnings of $66 7 million compared to $67 $9 million in 2023.

Speaker Change: Consolidated operating earnings of $331 9 million compared to $325 8 million last year.

Speaker Change: As a percentage of revenues the operating earnings margin increased 30 basis points to 25, 5% in 2024.

Speaker Change: Our fourth quarter effective income tax rate of 22, 5% compared to 21, 4% last year.

Speaker Change: Net earnings of $258 $1 million compared to $255 $3 million in 2023, and net earnings per diluted share of $4.82 in the quarter compared to $4 75 per diluted share last year.

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

Speaker Change: Sales of $379 2 million compared to $363 $9 million last year, reflecting a three 9% organic sales gain and $2 1 million of acquisition related sales, partially offset by $1 million of unfavorable foreign currency translation.

Speaker Change: The organic improvement is largely due to a gain in sales to customers serving critical industries, including a high single digit increase in specialty torque with respect to critical industries. In addition to higher torque product sales activities in aviation and general industries were encouraging during the period.

Speaker Change: Gross margin improved 180 basis points to 41% in the fourth quarter from 39, 2%. In 2023. This is largely due to increased sales volumes of higher gross margin critical industry sectors and savings from RCI initiatives.

Speaker Change: Operating expenses as a percentage of sales of 24, 3% in the quarter was unchanged from last year.

Speaker Change: Operating earnings for the C&I segment of $63 $5 million compared to $54 1 million last year.

Speaker Change: The operating margin improved 180 basis points to 16, 7% from 14, 9% in 2023.

Speaker Change: Turning now to slide eight.

Speaker Change: Sales in the snap on tools group of $506 $6 million compared to $513 3 million a year ago, reflecting a one 4% organic sales decline and $600000 of favorable foreign currency translation.

Speaker Change: The organic decrease reflects a low single digit decline in the United States business, partially offset by a mid single digit gains in our international operations.

Speaker Change: Again this quarter, we believe that continued attenuation in a relatively modest year over year sales decline in the U S. Mobile network favorably demonstrates the resilience of this business given the still uncertain environment.

Speaker Change: Gross margin declined 60 basis points to 44, 6% in the quarter from 45, 2% last year, mostly due to the decreased volumes and the effects of increased sales of lower gross margin products.

Speaker Change: Operating expenses as a percentage of sales improved 10 basis points to 23, 5% in the quarter from 23, 6% in 2023.

Speaker Change: Operating earnings for the snap on tools group of $106 $9 million compared to $111 million last year. The operating margin of 21, 1% compared to 21, 6% in 2023.

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

Speaker Change: Sales of $456 6 million compared to $458 million in 2023, reflecting a one 6% organic sales increase partially offset by $1 5 million of unfavorable foreign currency translation.

Speaker Change: Organic gain includes a mid single digit increase in activity with OEM dealerships and a low single digit gain in sales of diagnostic and repair information products to.

Speaker Change: Independent repair shop owners and managers the ladder aided by the introduction of our new Apollo plus handheld diagnostic platform.

Speaker Change: These gains more than offset a low single digit decline in sales of under car equipment.

Speaker Change: Gross margin improved 200 basis points to 47% from 45% last year, primarily reflecting increased sales of higher gross margin products, including a more favorable mix of software and benefits from RCI initiatives.

Operating expenses as a percentage of sales rose 50 basis points to 24% from 19, 9% in 2023, largely due to increased personnel and other costs.

Speaker Change: Operating earnings for the <unk> group of $121 4 million compared to $113 $3 million last year. The operating margin improved 150 basis points to 26, 6% from the 25, 1% reported last year.

Speaker Change: Now turning to slide 10.

Revenue from financial services increased $3 $3 million was three 4% to $100 5 million from $97 $2 million last year.

Speaker Change: Financial services operating earnings of $66 7 million compared to $67 $9 million in 2023 financial services expenses were up $4 5 million from 2023 levels, including $4 4 million of higher provisions for credit losses.

Speaker Change: As a percentage of the average services portfolio the financial services portfolio expenses were one 3% in the quarter as compared to one 2% last year.

Speaker Change: And the fourth quarters of 2024 and 2023, the respective average yield on finance receivables were 17, 7% and 17, 8% while the average yield on contract receivables was nine 1% an eight 9% respectively.

Speaker Change: Total loan originations of $285 $1 million in the fourth quarter represented a decrease of $18 million or five 9% from 2023 levels, including a five 8% decline in extended credit originations. The decrease in extended credit originations, mostly reflects lower sales of big.

Speaker Change: Ticket longer payback items.

Speaker Change: Moving to slide 11.

Speaker Change: Our year end balance sheet includes approximately $2 5 billion of gross financing receivables with $2 2 billion coming from our U S operation.

Speaker Change: For extended credit or finance receivables. The U S 60 day, plus delinquency rate of 2% is up 20 basis points from the fourth quarter of 2023 trailing 12 month net losses for the overall extended credit portfolio of $66 3 million represented a $3 three 2% of Outstandings at year end while.

Speaker Change: Delinquencies and net losses have been trending upward we believe that these portfolio performance metrics remain relatively balanced considering the current environment.

Speaker Change: Now turning to slide 12 for the quarter.

Speaker Change: Cash increased by $47 $2 million as compared to an increase of $42 2 million in the fourth quarter of last year.

Speaker Change: Cash provided by operating activities of $293 5 million in the quarter represented 111% of net earnings net cash used by investing activities of $40 $2 million, mostly reflected net additions to finance receivables of $26 2 million and capital expenditures of $18 1 million.

Speaker Change: Net cash used by financing activities of $201 5 million included cash dividends of $112 3 million and the repurchase of 315000 shares of common stock for $112 $5 million under our existing share repurchase programs.

Speaker Change: As of year end, we had remaining availability to repurchase up to an additional $429 $4 million of common stock under our existing authorizations.

Speaker Change: Turning to slide 13.

Speaker Change: Trade and other accounts receivable increased $24 $3 million from 2023 year end days sales outstanding of 62 days compared to 60 days at year end 2023 inventories decreased $62 $5 million from 2023 year end and on a trailing 12 month basis inventory turns of two <unk>.

Speaker Change: Compared to two three at year end 2023 or.

Our year end cash position of $1.365 billion compared to $1 billion $1 5 million at the end of 2023.

Speaker Change: In addition to our existing cash and expected cash flow from operations, we have more than $900 million available under our credit facilities and there were no amounts borrowed or outstanding under the credit facility. During the year, nor was any commercial paper issued or outstanding in the year.

Speaker Change: That concludes my remarks on our fourth quarter performance I'll now briefly review a few outlook items for 2025.

Speaker Change: With respect to corporate costs. We currently believe that the expenses in each quarter of 2025 will be relatively in line with those incurred in the fourth quarter of 2024 or about $27 million per quarter.

Speaker Change: Additionally, during 2025, we expect to incur approximately $6 million pre tax per quarter of increased non service pension costs, largely due to higher amortization of actuarial losses.

Speaker Change: These noncash costs will be recorded below operating earnings as part of other income and expense net on our statement of earnings.

Speaker Change: We expect that capital expenditures will approximate $100 million and we currently anticipate that our full year 2025 effective income tax rate will be in a range of 22% to 23%.

Speaker Change: Finally in 2025, our fiscal year will contain 53 weeks of operating results with the additional week occurring at the end of the fourth quarter.

Speaker Change: This occurs every five or six years and historically it has not had a significant effect on our full year or fourth quarter total revenues on net earnings a mill call or the call back over to Nick for his closing thoughts Nick.

Speaker Change: Okay.

Nick Pinchuk: Thanks, Adam.

Speaker Change:

Speaker Change: Well our fourth quarter.

Speaker Change: Progress against uncertainty.

Speaker Change: The markets remain robust repair spending up the number of textile wages up carpark aging in the vehicle implicitly rising.

Speaker Change: But the uncertainty remains created by the unpredictable macro environment, but we did make progress against the wind.

Speaker Change: Resilience was on display in the tools group the pivots, succeeding in the GAAP shrinking.

Speaker Change: And the balance and breadth of our operations was evident in the performance of C&I NR Tonight, both turning in solid quarters with gang Busters profitability resilience balance in progress written across the results.

Speaker Change: The tools group organic sales down one 4%.

Speaker Change: But making continuing progress and maintaining the strength of the network C&I.

Speaker Change: C&I sales up three 9% organically Oi margins of 16, 7% up 180 basis points at another high.

Speaker Change: Significant sales and profit gains in custom kits and precision toward confirming that we can roll out the snap on brand out of the garage successfully and very profitably.

Speaker Change: And finally, our F&I sales up one 6% Oi margins of 26, 6% a rise of 150 basis points, representing another record all driven by the promising and powerful quarters of software and committed RCI.

Speaker Change: It all came together for sales of one $198 7 million an increase of 0.2% are returned to positive territory. The overall gross margin was up 140 basis points to 49, 7% in the Oi margin was 22, 1% up 50 basis points yet another record.

Speaker Change: We are encouraged by the quarter and by our prospects going forward notwithstanding continuing uncertainty.

Speaker Change: We believe our markets will remain resilient and robust, reflecting the essential nature of the critical task that defined.

Speaker Change: We believe we've not only maintained but have expanded our considerable advantages in product and brand and in people even have we even as we proceeded through the turbulence.

Speaker Change: We believe our snap on value creation processes do deliver value every day day in and day out. We believe are capable team really is a difference maker battle tested enables a real advantage to consistently create positive outcomes overcoming obstacles. It has happened over and over and we have all been witnesses.

Speaker Change: And we believe that all these positives will keep our enterprise moving forward extending and continuing its positive its positive trajectory throughout 2025.

And for many years beyond.

Speaker Change: Before I turn the call over the operator, I'm going to speak directly to our franchisees and associates I know many of you are listening.

Speaker Change: I've spoken today on the special nature of our enterprise resilient capable determined ringing progress from challenge you are the principal authors of all of that.

Speaker Change: For your success in moving our company forward prevailing in turbulence in proceeding with confidence you have my congratulations.

Speaker Change: But the capability and skill you Marshall every day on behalf of our team you have my admiration and.

Speaker Change: And for your unwavering dedication to and strong belief in the future of our corporation.

Speaker Change: Have my thing.

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

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

Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: You are using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw it. Please press star then.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Scott <unk>: Our first question today comes from Scott <unk> of Roth MKS.

Speaker Change: Please go ahead.

Speaker Change: Good morning, guys and thanks for taking my questions Hi, Scott.

Speaker Change: Talking about tools I'm, just trying to flesh out how close we are to I guess, turning positive could you maybe talk about.

Speaker Change: The confidence at the shop level I know you talked about it.

Speaker Change: I guess still being high but.

Speaker Change: I guess there.

Speaker Change: Confidence is high but cash poor has that scenario.

Speaker Change: <unk> actually gone backwards at all.

Speaker Change: Second part of that.

Speaker Change: Don't think it's gone back let's look I think I think it's like this I was just thought I was in a shop.

Speaker Change: A couple of weeks ago and talked to some franchisees the other day and talk to some other text and other parts of the country in total franchisees all over the country and it's sort of like this I think people are pretty confident that vehicle repair is robust because of all the things I went through on my.

Speaker Change: <unk>.

Speaker Change: You see the Bureau of Labor data, it's pretty much everybody is talking about we need more taxes I got a lot of work I can't do is try get your car repaired and you'll find out what it means and then then you address the uncertainty in one one thought might've been I think is that when the election resolved itself.

Speaker Change: And things went forward may be.

Speaker Change: I guess stated positive view of the current team towards business and particularly towards the people at work I mean, they said stuff like the other day about its technical education month, then we.

Speaker Change: We will find pads to Austin and also our alternate paths of higher education that will provide real skills for real careers.

Speaker Change: And we will make technology work for Americans not Americans work for technology and stuff like that so those are music for the year sort of tax but on the other hand.

Speaker Change: They see all of these initiatives and where everyday you get up and you've got a piece of paper on what's going on in Washington, and you hear words like Panama and in Greenland in Gaza and all this stuff and and as I said in our remarks, nobody knows what's up so you kind of have this idea that you then like you know what it is it's like being on space Mountain at Disney World, You would get on space amount to get into.

Speaker Change: And you were in the dark and a cargo of left and right and left and right. In terms, you don't know where you're going but you know you're pretty confident that youre going to get to the right place at the bottom.

Speaker Change: And so that's where they are now they are kind of waiting to see what's going to happen. So I think that the only change between last time. There is still uncertain. There's still looking at short payback items, but I would think people often ask me. What do you think would have to happen to make them positive I think if things calm down.

Speaker Change: In Washington, and there'll be more.

Speaker Change: You know predictable activity and more corridors of advancement that didn't change all the time.

Speaker Change: I think that would be a big change.

So that's where I see them now they are talking about the subdivision.

Speaker Change: We like 10 minutes.

Speaker Change: I don't know where they're going.

Speaker Change: Got it and as far as.

Speaker Change: Snap on and the actual pivoting are you guys fully pivoted and making sure we have more product.

Speaker Change: But I would say look I was encouraged by one point for it if you look at it this year.

Speaker Change: It's something that we came out of the box.

Speaker Change: Box down seven.

Speaker Change: Then were $7 seven down then were $3 seven down and our one point worth us.

Speaker Change: And so that's I think that's a pretty positive indication you could've said well it might have been better.

Speaker Change: No I never I'm pretty confident of our direction, because we keep pivoting and we keep getting better at things.

Speaker Change: But I can't.

Speaker Change: Tell you the slope of the curve you know.

Speaker Change: But I got it.

Speaker Change: We are doing is working it's working.

Speaker Change: Great and then just last question on C&I and <unk> could you tell us what the external sales work for each.

Speaker Change: Organic basically.

Speaker Change: External sales I think you could say the external sales for us and I was closer to what it is the C&I external sales were somewhere in the range of you know half of what what that was you know something like that.

Speaker Change: Still kind of in the same range, but around a little bit less than that.

Speaker Change: That's how it is because it was the.

Speaker Change: The idea about C&I some of the stuff they produce expect somebody tools tool stuff the torque stuff goes through the the tools group.

Speaker Change: Oh got you okay.

Speaker Change: Yeah.

Speaker Change: Great Alright, that's all I have for now thank you.

Speaker Change: The next question comes from Sherif El today of Bank of America. Please.

Speaker Change: Please go ahead.

Speaker Change: Hi, good morning.

Speaker Change: Just wondering if you could add a bit more color on the decline in originations is that mostly a function of product mix are you seeing customers finance less of a risk.

Speaker Change: Purchases overall.

Speaker Change: Mostly mostly tool storage down.

Speaker Change: That would fit in.

Speaker Change: So remember that that's part of the pivot here you know in other words that people are less willing I think this is a predictable outcome all been saying about customer preference part of it is they want quick paybacks in other words, they want stuff that will work right away, but also the stuff is when they buy the stuff off the ban on what we would call revolving accounts they pay it off in 16 weeks.

Speaker Change: Are they pay it in cash or if they want and so that tends to be that tends to be.

Speaker Change: So they spend more of their money on those shorter shorter items that they liquidate the obligation of 15 weeks and they don't get involved in like a three year deal.

Speaker Change: That is the originations the other factor is and you put your finger on it was very stage view is that the Apollo plus is at the lower end of the of the member I said it was the b.

Speaker Change: Quickest payback, which means low lowest cost access to full intelligent diagnostics and more of that would be handled on NRA than say like a Zeus, which is much more expenses like the top of the line. So the diagnostic line the new product, we introduced could be some portion of that could be handled not on EC. So those are all.

Speaker Change: Contributing but I will I will point out to you, though as well as I do on all these calls as originations are associated with sales off the van.

Speaker Change: Not sales to the VAT.

Speaker Change: They don't necessarily follow in the same timeframe, we sell a box to a van it doesn't necessarily sell off right away. Sometimes it is the guidance shops. It for awhile to people. So it's an imprecise science, but what youre seeing in most of all to answer quickly that five 9% reduction in originations in total I believe that was.

Speaker Change: The number is principally driven by lower tool storage sales.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: The next question comes from Luke junk of Baird.

Speaker Change: Please go ahead.

Luke Junk: Good morning, Thanks for taking the questions I'm, hoping you could double click on the strength that youre seeing in especially towards right now and just at a high level I mean, it seems like that should benefit multiple areas across both critical industries and some of the growing opportunities within auto repair and maybe Nick can.

Luke Junk: Any thoughts around investment there really I think an organic focus area, but could we see any additional M&A seems like mounts as Ben.

Luke Junk: Pretty good deal.

Luke Junk: Certain a place where we've looked at.

Luke Junk: <unk> last year, which required I think in the fourth quarter of last year was a torque related a torque controlled power tool company. So it gave us it was some of the technology that drove that Cte <unk> hundred to fruition one of the things. We're doing I think we would look to invest in there and so that would be one.

Luke Junk: Our principal quarters for exploration or things like that because we really believe in that the other thing we're investing in a kind of a.

Luke Junk: Organic way.

Luke Junk: Is is to try to bring the operations together to create more combinations like <unk> 800 is a key.

Luke Junk: <unk> medium.

Luke Junk: The technologies, we had in the years of nor bar.

Luke Junk: And the drives the basically front end of the power tools and mounts acquisitions and some of the some of the systems. We have in terms of in terms of torque control for mounts and and cooling that we had in power tool and that came together and created a superior tool that we believe has no equal.

So that's so you're going to see us look at acquisitions, but you're also going to see us trying.

Luke Junk: Trying to invest some money in smashed in those businesses that smashing, but trying to make sure theres a good irrigation of technologies related technologies between those businesses because we believe in sum total they are quite powerful.

Luke Junk: Good stuff and then for my follow up.

Speaker Change: This is hard to dial in precisely, but Nick any thoughts on just the continued headwinds in big ticket right here and then the initiatives origination trend I should say and just you know as we think about the potential growth of the tools group. This year, how much if any big ticket would you need if you were going to grow in line with the law.

Speaker Change: Longer term, 45% and you know relative to the pivot.

Speaker Change: Small ticket.

Speaker Change: Any way to kind of calibrate how much is left there to go after sure look I think there's a lot left in and small ticket isn't a question of getting things that attract people in other words the idea behind the pivot is first and foremost I think.

Speaker Change: Is <unk>.

Speaker Change: The widening and bringing out more like attractive new product you know what I call. We call Hey, you product hit products in the small ticket arena, therefore, getting the customer excited about things he will actually pull the trigger on in this environment, that's really what's going on here.

Speaker Change: It's what we call pivot includes manufacturing and design and manufacturing and of course marketing the address it all up in a promotion, but so you can keep doing that and we believe that brings us that keeps us on an upward trend of course, if you're not if you're having people shy away from big ticket items youre not firing.

Speaker Change: Lately on all cylinders.

Speaker Change: So you know it is.

Speaker Change: Hard for me to answer that trajectory I think with pivoting, we keep going positive because we know how to improve we probably don't fire on all cylinders, so people get a little more comfortable.

Speaker Change: But I don't think it's a matter of if we can keep it.

Speaker Change: Those eight what I would call almost inexhaustible upward trend in the pivot.

Speaker Change: It's just we'd like to have all our products because our tool storage products are powerful.

Speaker Change: So if we can get them engage without even more stuff and people would buy even more so it's a hard thing to answer but I do think even if we didn't get the uncertainty broken we believe we can keep going with the uncertainty breaks then there would be a more normalization I'm not saying, we can't get back to normal without within.

Speaker Change: Breaking uncertainty.

Speaker Change: Take longer that's all.

Speaker Change: Got it thanks Nick.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Bret Jordan of Jefferies. Please go ahead.

Bret Jordan: Hey, good morning, guys now Brexit, Okay, let me throw the tariff question out there for you and I guess sort of relative positioning around what may or may not happen here.

Bret Jordan: Your domestic mix versus your competitors, how do you see yourself positioned and what's the impact.

Bret Jordan: Well you tell me how the tariffs play.

Speaker Change: Hey out and I'll tell you what the impacts because that's what I was looking for the answer to.

Speaker Change: I don't know you don't know what I mean, but look I think you know let me state that we certainly are more insulated.

Speaker Change: From import tariffs on imports than.

Speaker Change: Then most most so a pair of it at one.

Speaker Change: <unk> tariffs world.

Speaker Change: A lot of imported.

Speaker Change: Sources, then I think we make out pretty well.

I like our chances in that situation that doesn't mean, we're totally immune to it you know we do we do have tariff costs right now we've been eating them for years. You know we have we import some stuff that attract tariffs, but generally we make in the markets, where we sell in a huge portion of our product line is made in the United States are in pretty good shape.

Speaker Change: I think another tariffs you know <unk> tariffs, who knows it's you know you never know what people are going to do but I think just saying our first rodeo as I said in my call I mean, no our ways around that when we saw when we saw the stuff come up we're already thinking about ways to kind of minimize and optimizing that situation and there are paths to do that.

Speaker Change: So we're not shaken in our boots over the whole thing.

Speaker Change: And then on the relative strength of international tools versus U S. I mean sort of what do you attribute that to is there less competition. There is no harbor freight or macro in those markets. So it's a different competitive landscape or more would actually there.

Speaker Change: Who did you say.

Speaker Change: Mapco Harbor freight Matt you know more people, who are selling more tools in the U S market that are not internationally.

Speaker Change: Look I don't I don't think.

Speaker Change: I don't think that's the situation.

Speaker Change: I don't think that.

Speaker Change: Nobody really says that that's not the situation in the U S and U S simply associated as you think about the uncertainties that are in the U S.

Speaker Change: The border.

Speaker Change: The idea now you do have the two wars and inhabit other environments, Australia, I think thinks its thinks of itself as being insulated from all of that.

Speaker Change: And you have the election, you have what I call the rapid fire ideas out of Washington.

Speaker Change: You have the rise in prices. So I think the uncertainty things kind of inflict the U S to a greater extent than anything else.

Speaker Change: Our UK business seems to be more solid and a lot of this stuff.

Speaker Change: Brad This is where you come from so the international businesses I think if you go back and look at it they have been suffering for a while now they come back somewhat so youre seeing some of that snapback there in that situation I don't think the competitive.

Speaker Change: Environment changes that much really.

Speaker Change: Either place because you have other competitors that are national competitors. For example, if you are in Australia, you've got you got people there that people prefer and and technicians don't own their own tools that are quite the same extent as they do here.

Speaker Change: Have all of that kind of stuff. So I don't think there's much the competition isn't the variance between the organizations between the locations.

Speaker Change: Alright, great. Thank you.

Speaker Change: The next question comes from David Macgregor of Longbow Research. Please go ahead.

Joe Nolan: Hey, Good morning. This is Joe Nolan on for David.

Speaker Change: Okay, Yeah, that's the parents.

Joe Nolan: Okay.

Joe Nolan: Yes.

Joe Nolan: Sorry, Marty.

Joe Nolan: Oh is that I'll come to the party.

Joe Nolan: Thank you I appreciate it.

Speaker Change: So first just a strong quarter for the critical industries and for the torque tools business.

Speaker Change: You've invested in some capacity there so I assume you're shipping against backlog orders I was just wondering what youre seeing in terms of order activity and.

Speaker Change: Orders activity is pretty good I mean, we do have some backlog there.

Speaker Change: <unk> always said isn't it had been higher before you know it built up and when we we put on a new we put our new expansion that we kind of we didn't liquidate the backlog, but we more normalize it so I wouldn't call. It a buildup of backlog, but the backlog has been pretty solid.

Speaker Change: So I'm pretty I'm pretty positive about the critical industries.

Speaker Change: And the thing about it is that it seems like we have increasing demand all the time because the.

Speaker Change: The idea of complex and customized kidding.

Speaker Change: Seems to have high demand and growing.

Speaker Change: Everybody and their brothers seems to want to have a set that matches. The particular problem, whether they have and we can put them right on target.

Speaker Change: And we may be the only person who really does that very effectively plus it includes a whole bunch of snap on tools, which creates a whole other cache to the combined kit.

Speaker Change: So we love that business it seems that it was up it was up.

Speaker Change: Substantially in the quarter I'm not going to give you the number but I can tell you that business win.

Speaker Change: Bananas in the quarter, so I feel pretty good about it and it's very profitable.

Speaker Change: Yeah, that's great.

Speaker Change: And I know you guys don't provide guidance, but just thinking about that business as margins into 2025, just any of the moving parts there obviously.

Speaker Change: Strength in critical industries is a benefit for margin. So just anything more you can provide.

Speaker Change: All I can tell you is what.

Speaker Change: What I tried to make in this quarter was we had two things.

Speaker Change: We basically had the tools group, returning pivoting and narrowing the gap of course, it was down some much more of a sliver than it had been down but the results 20 to 22, 1% up 50 basis points and if you really looked at last year's <unk>.

Speaker Change: You would see that you know there might've been some boost some little help there from some of the some like special items like legal settlements and stuff like that and equity. So it was up tremendously.

Speaker Change: Ah nicely and that was rolled out by the other two groups really having wowser quarters profitability wise for sure and that profitability was rooted in the idea that they are more profitable divisions in the case of ours in either software area was going gangbusters.

Speaker Change: And in the <unk> and in the C&I group the customer towards the critical industries, those customized kit gangbusters and though on top of it like I said in RCI and I get that but this is probably missed them my comments across RF than I am.

A great majority of the businesses, even the hardware businesses were up over 100 basis points and that was RCI rapid continuous improvement so going forward. What you have is.

Speaker Change: One way for those profitable businesses, and then seemingly good momentum of RCI across the corporation I hope nobody misses that in this quarter.

Speaker Change: Yeah, that's great.

Speaker Change: And then just.

Speaker Change: Quickly on the tools group.

Speaker Change: Apologies if I missed this but did you talk about sell in versus sell through in the quarter.

Speaker Change: I did not its about the same.

Speaker Change: Got it.

Speaker Change: Alright, great. Thanks, I'll pass it on.

Speaker Change: Oh.

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

Sarah: Thank you all for joining us today, a replay of this call will be available shortly on snap on dot com as always we appreciate your interest in snap on good day.

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

Sarah: [music].

Sarah: [music].

Sarah: [music].

Speaker Change: Good day and welcome to the snap on incorporated Q4 full year 2024 results conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Sarah: To ask a question you May press Star then one unattached telephone.

Sarah: Withdraw your question. Please press Star then two please note. This event is being recorded.

Speaker Change: I would now like to turn the conference over to Cerro Verde skiing, Vice President of Investor Relations. Please go ahead.

Cerro Verde: Thank you Alan and good morning, everyone. We appreciate you joining us today as we review snap on fourth quarter and full year results, which are detailed in our press release issued earlier. This morning, we have on the call Nick Pinchuk Snap ons, Chief Executive Officer, and Aldo probably are you snap ons Chief Financial Officer, Nick will kick off our call. This morning with his perspective.

Aldo Parise: 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 as usual we've provided slides to supplement our discussion. These slides can be accessed under the downloads tab in the webcast viewer as well as on our website snap on dot com under the investors section.

Aldo Parise: These slides will be archived on our website along with a transcript of today's call any statements made during this call relative to management's expectations estimates or beliefs are that otherwise discuss management's or the company's outlook plans or projections are forward looking statements and actual results may differ materially from those maintenance such statements additional information.

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

Nick Pinchuk: 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 Thanks, Sarah.

Aldo Parise: Everybody.

Aldo Parise: I'll start with the highlights of our fourth quarter.

Aldo Parise: I'll give you my perspective on our results on the market environment and our progress.

Aldo Parise: Considerable.

Aldo Parise: After that and as usual Aldo will move into a more detailed review of the financials.

Speaker Change: These are interesting times.

Nick Pinchuk: Filled with uncertainty, but snap on is built to prevail even in turbulence and then I'll just say our first rodeo its our job to confronted to overcome and to proceed with confidence confidence in the resilience of our market confidence in the strength of our strategic and tactical advantages and confidence in the insight and energy of our consistent and capable people.

And all of that echoed in the numbers. So here they are overall sales in a quarter or two.

Nick Pinchuk: One $198 7 million 0.2 up up 0.2%, both as reported and organically returned to positive territory profitability was strong with gross margins of 49, 7% a gain of 140 basis points and the Opco Oi margin was 22, 1% an increase of 50 basis points over.

Nick Pinchuk: 2023, an all time high for the fourth quarter financial services earnings of $66 7 million in the quarter were lower by $1 2 million.

Nick Pinchuk: Leading to a consolidated margin, including both Opco and financial services of 25, 5% an improvement of 30 basis points, our EPS for the quarter was $4 82 up seven from the 475 recorded last year.

Nick Pinchuk: The results show broad gains overcoming the uncertainty another period of sequential progress wrought by record performances by both the commercial and industrial or C&I by the commercial industrial or C&I group or and VI repair systems information or they are semi group combined with the tools group successfully pivoting to <unk>.

Nick Pinchuk: <unk> Tec preference of certain continuing to narrow the gap versus last year.

Nick Pinchuk: It was an encouraging demonstration of advantage, our resilience and our capability.

Nick Pinchuk: But first let's speak about the markets. We believe the vehicle repair market is robust a continuing stream of new tools and data to confront the rising complexity of the modern vehicle repair shop today dealerships or independent or independents must deal with an expanding array of challenges multiple powertrains evs plug in.

Nick Pinchuk: <unk> Super hybrid advanced combustion and sophisticated digital system and a wide range of autonomous operations devices like adaptive cruise control Lane departure warning collision avoidance sensors self parking features it goes on and on and on.

Nick Pinchuk: And the list is getting longer.

Nick Pinchuk: And technicians have to fix it all addressing a dizzying array of procedures.

Nick Pinchuk: It's daunting, but this is where snap ons shines scanning diagnosis guiding at fixing enabling the text.

Nick Pinchuk: Making enabling the techs, making the difficult task easier and when combined with an aging car park, but now averages 12 six years and includes a multitude of technology generations, all needing to be fixed driving even more complexity and requiring even more tools and more data.

Nick Pinchuk: It represents even more opportunity.

Nick Pinchuk: We love it.

Nick Pinchuk: Vehicle repair several slides so let's start by focusing on shops.

Nick Pinchuk: The dealerships and independent shops, adjusting to the complexity often required often requiring things like meaning lifting equipment to handle the increased weight of evs tire changes that accommodate larger wheel sizes software suites for managing the shop for organizing parts data into streamline catalog for scheduling repairs and customer interface.

Nick Pinchuk: And for guiding the text to the most sophisticated are complicated of repairs. This is where our C&I operates.

It's a target rich environment for our array of under car in collision equipment, and it's a growing market for our software and data products and snap on is well positioned with our innovative hardware, but especially with our proprietary comprehensive database billions of insightful records advantages that the advantages that we believe make snap on the data King and vehicle.

Nick Pinchuk: Repair.

Nick Pinchuk: Our position that I think youll see was reinforced again by a quarter by a rising gains in that arena.

Nick Pinchuk: Now shifts that attacks the individuals working in the base under the Hood toyland oriented hitting the touch screen apply on a scale and make them and actually making the repair again this quarter and the opportunity to meet with a number of franchisees and their customers.

Nick Pinchuk: And they all expressed their enthusiasm for the strength of vehicle repair and external data confirms that view miles driven up the car Park AG hospital spending on autopilot hustle spending on auto repairs higher hours worked increasing and best of all tech wages rising.

Nick Pinchuk: I was recently in a garage and a service manager.

Nick Pinchuk: Radically proclaim to me that the work just keeps rolling in we need more tests. It makes sense expanding complexity means more time spent on each repair and more trained professionals needed to meet the demand and keep the shops prospering.

Nick Pinchuk: So it's clear the textile in a good position.

Nick Pinchuk: But that doesn't make them immune to the macro uncertainty around them.

Nick Pinchuk: Ongoing wars.

Nick Pinchuk: Immigration disputes lingering inflation and although the elections in the rear mirror and the new team.

Nick Pinchuk: It will be more focused on business expansion theres, a rapid fire of new initiatives tariff bonds on and off again actions impending shakeups and foreign ventures of many varieties up to now it's hard not to be uncertain about what's up.

Nick Pinchuk: Okay.

Nick Pinchuk: So the franchisees they echoed that uncertainty and then the turbulence the technicians continue to prefer a quick payback items.

Nick Pinchuk: Once that make work easier and cut labor times right away items like hand tools and new rates diagnostics that can be paid off in shorter cycles and it remained cool and big ticket longer payback items like tool storage. So the tools group is continuing its pivot focusing its engineering manufacturing and is selling to match the shift in those customer preferences.

Nick Pinchuk: So despite some challenges in automotive.

Nick Pinchuk: Despite some challenges.

Nick Pinchuk: Automotive repair does remain strong and we believe we're pivoting successfully to take greater advantage.

Nick Pinchuk: Now, let's talk about critical industries, where C&I takes snap on out of the garage solving Tampa consequence that require precision durability reliability and repeatability all performed in some of the most demanding in crewing environments from clean rooms, the mindsets of assembly lines to building spray scripts in this market.

Nick Pinchuk: <unk> is very promising.

Nick Pinchuk: Our activity in critical industries continued rising across multiple sectors aviation natural mix of the general industry were all up nicely.

Nick Pinchuk: Rina also represents our most significant international presence and those markets were mixed in Europe.

Nick Pinchuk: In the southern and Southern Europe up Germany down in Asia in Asia in Asia Pacific, China weaker, but gains in gip in Japan, and South Asia. Despite.

Nick Pinchuk: Southeast Asia, despite unfavorable currency.

Nick Pinchuk: And gains in South Korea as well.

Nick Pinchuk: Add that to that situations. Despite unfavorable currency. So C&I does have its challenges across the geographies and the segments, but we have made significant advantages advancements and do see substantial opportunities for tomorrow, leveraging our advantages in product and our brand and our people.

Nick Pinchuk: I think when you see the results you realize it's working.

Nick Pinchuk: So both the auto repair and critical industries market remain positive and we are ready and well positioned to advance to advance on those right. Now is very wide runways at the same time, it's clear it's clear to us and I hope it's clear to you that we have more potential along our runways for improvement and as we proceed we're fortified by our snap on value creation processes safety quality customer.

Nick Pinchuk: Innovation rapid continuous improvement or and rapid continuous improvement or RCI, they've never been more important helping helping overcome the turbulence and offering our resilience.

Nick Pinchuk: Especially important customer connection and innovation.

Nick Pinchuk: That's our unique advantage standing next to working men and women observing each task matching and the insights gained with technology master developing new and innovative products that make that mix works that makes work easier.

Nick Pinchuk: And to considerable strength and our team is committed to continue to wheel did with determination.

Nick Pinchuk: Now, let's talk about the operating groups.

Speaker Change: Let's start with C&I.

Speaker Change: Fourth quarter sales of $379 $2 million was an all time high represent an increase of $15 3 million versus last year and included $2 1 million in acquisition related sales a million and unfavorable foreign currency in our organic rise of three 9% driven by driven by gains with customers in critical industries.

Speaker Change: Strong sales of our customized kits led the way meeting the rising demand for solutions that matches that match specific tasks, our specialty torque division with also a clear a clear positive.

Speaker Change: Clear problem precision is becoming more essential everyday and our broad tour corporate could C&I right on target and you can see it clearly in the numbers Oi for C&I was $63 5 million in the quarter up $9 4 million or 17, 4% from 2023 and the group gross.

Speaker Change: It was up a 180 basis points on the operating margin was 916, 7% that was also up 180 basis points Wilder.

Speaker Change: C&I just keeps getting better.

Speaker Change: It's a great indication of our ability to roll out of the garage.

Speaker Change: The specialty torque business was the C&I is really making strides toric is hot now and snap on is that the party with growing away with a growing away array of new products like our our heavy duty cordless torque multiplier, we call. It the CDMA hundreds delivering toward from 160 foot pads, all the way up to 800 per pump just what's needed to meet the broad challenge that might occur.

Speaker Change: Mining and oil and gas and rail and heavy duty. It's a tool. It anyhow. It was a tool that was made possible by our expansion in torque.

Combining the efficiencies of our nor bar gear design with the compact operation, but snap on power tool authoring the wide range, making the delivery of high torque levels easy and safe safe, enabling easy access to tight spots.

Speaker Change: The new units also equivalent, especially designed transducer control for applying just the precise force a breakthrough and its benefits for our advanced power tool coal cooling system that makes it much more durable.

Speaker Change: <unk> 800 torque packs a lot into one compact tool improvements adversity versatility safety access durability in a position it has at all.

Speaker Change: And where the tests are critical.

Speaker Change: It's already a big hit.

Speaker Change: Yeah.

Speaker Change: C&I sales up customized kits and precision toward rising to new levels, all with record profitability a high a high point profitability with much more room to grow and improve.

Speaker Change: Now onto the tools group.

Speaker Change: Early sales of $506 6 million down, but representing progress on narrowing the gap versus 2023, the progress is evident but uncertainties uncertainty uncertainty still lingers NOI for the tools group was.

Speaker Change: $106 9 million and $4 1 million below 2023, with an operating margin of 21, 1%, but despite the turbulence.

Speaker Change: We remain steadfast in supporting our van network, keeping its strong spending on it and that profitability was recently acknowledged by multiple publications. The franchise business review recognized us and its latest rankings for franchise satisfactorily satisfaction listing snap on as a top 50 franchise.

Speaker Change: For the 18th consecutive year.

Speaker Change: We named number one among all franchisees in entrepreneur magazine's 2024 list of top franchises for veterans.

Speaker Change: In Stateline was ranked by the UK Elite franchise magazine as the number one franchise in that country.

Speaker Change: A distinction we have held for three consecutive years.

Speaker Change: Now these types of rankings confirm the fundamental strengths of our franchisees individually.

Speaker Change: Van business in general.

Speaker Change: And I can tell you that this would not have been achieved without a continuous stream of new products developed through our strong customer connections inside an experienced transferred transformed and innovation approach significant advantage in a rapidly changing world. That's vehicle repair one of the latest of those editions as our Milwaukee manufactured.

Speaker Change: <unk> Hex driver specifically designed for modern vehicles equipped with advanced driver assist systems like adaptive cruise control in the base in a side by side with the techs, making the actual prayers repairs, we saw the difficulty in aligning the radar.

Speaker Change: Answers that enable that autonomous control enable the adaptive cruise control.

Speaker Change: The work was difficult texture.

Speaker Change: <unk> will remove the bumpers and the Grilles dismantling the front end of the car just to reach the workplace, a very time consuming and non value added exercise that risk damage to nearby. There also was damaged in nearby parts of upon us all just to clear the pathway for the eventual repair that.

Speaker Change: That observation drove the design of our new and double the <unk>, 35% to three five millimeter hex driver featuring an extra long five and three quarter and shift.

Speaker Change: And an enhanced reach that that bypasses the obstructions, where these allowing the necessary adjustments without dismantling anything.

Speaker Change: And then that newly launched two will also includes our snap on instinct ergonomic handle design, providing superior control, making it easier to execute the work with the precision required for the very sensitive of radar brackets.

Speaker Change: <unk> 35, 35 makes repairs faster easier and more profitable and the text of notice group.

Speaker Change: Also in the quarter, we launched a new lineup of hand tools based on another customer connection witnessing the difficulty of applying leverage to the to the opening of a standard combination wrench.

The box in the tool was great for enhanced engaging at faster in a crowded engine Bay, just slide right in there, but when extreme force was needed and a grip with the opposite far and was necessary. The task was extremely uncomfortable because we opened under the wrench digs into your hand to solve them.

Speaker Change: Our engineers designed our new XD SDM a series that combines a box in low profile head with a soft grip grip ratchet handle providing the access technicians need, but enabling the maximum forced to be applied comfortably with the ergonomically and contoured pushing grip handle breaking bolts free without wincing.

Speaker Change: Pain or.

Speaker Change: Our slipping off under load the new XD ESG M.

Speaker Change: It's <unk>.

Speaker Change: Talk about it here because it's a prime example of a fast payback items.

Speaker Change: Simple, but powerful innovation that makes work safer faster and easier and the techs have loved it making the ranch one of our $1 million hit products just since it launched a few months ago.

Speaker Change: Well, that's the tools group customer.

Speaker Change: Customer connection producing innovative products operation operations, continuing to pivot meeting the customer's preference for fast payback items, and making progress in narrowing of the gap all while keeping the network strong and the turbulence.

Speaker Change: Now for ours.

Speaker Change: Volume in the fourth quarter was $456 6 million up organically, one 6% gains with both OEM dealerships and with independent shop owners for a diagnostic platforms and repair information products, partially offset by lower activity in under car equipment, our C&I operating earnings in the quarter were up a 100.

Speaker Change: $21 4 million, representing an increase of $8 1 million or seven 1% gross margins were up 200 basis points and the operating margin. The operating margin operating margin was a strong 26, 6%.

Speaker Change: Up 150 basis points from last year from the prior year the highest ever.

A record in the.

Speaker Change: The record reflects a rise in software, but it's also evidence of the retina.

Speaker Change: <unk> software, it's a great thing, but it's also evident evidence of a strong and broad RCI with the great majority of our <unk> businesses software and hardware increasing margins by well over 100 basis points, Jack we really love that kind of thing because it makes our profitability source in our Mitchell one.

Speaker Change: Speaking of profitability, our Mitchell one specialty software division.

Speaker Change: <unk> software to independent shops continues incandescent success, expanding its database big data, reaching 3 billion repair records in 500 billion data points are powerful and proprietary advantage that fuels, our intelligent diagnostic platform communicating directly with vehicles translating the trouble supplying comps.

Speaker Change: Lex inductive wielding complex inductive models identifying the problem and guiding technicians to their repair process, all with unprecedented speed productivity and profitability.

Speaker Change: Now we can't talk about that without talking about the Apollo plus the newest member of the intelligent diagnostic intelligent diagnostics lineup released in the late third quarter and it continues to shine, surpassing previous generations and very importantly, expanding the number of software subscriptions it's easy.

Speaker Change: And smart and.

Through this day and age at this time it represents a text quickest payback access to the power of snap on intelligent diagnostics, we expected it to be a winner in it.

Speaker Change: <unk>.

Speaker Change: Also in the quarter under car equipment Division released the new B 4400, commander wheel alignment machine.

Speaker Change: It's a game changer for shops because of its unique flexibility. So a lot of shops don't have space and they don't do alignments at all and send them out will drive us today need new equipment for matching.

Speaker Change: The equipment of that time for matching the rising vehicle complexity. For example alignment has never been more important.

Speaker Change: But where do you put the new units without a costly expansion and then manage that in many cases, the billings are already landlocked and shop owners can't sacrifice in everyday repair bay for periodic but necessary profitable and profitable alignment procedures. So the answer is the <unk> 4400.

Speaker Change: Versatile smart modular system, it's got an innovative design with a control center housed in a small toolbox that wirelessly connect with.

The two <unk>.

Speaker Change: Independent mobile power that hold sophisticated for cameras that hold a sophisticated force camera setup. The sector. Those sections can easily be stored out of the way, while not inaction and can be assembled anywhere in the shop quickly delivering.

Speaker Change: Alignment capability as needed and on command, regardless of the lay out whether youre sharpish.

Speaker Change: It's short or wider deeper narrow it doesn't matter.

Speaker Change: Our propriety and our proprietary software with our based on our four camera systems enables a very quick setup. So therefore setting it up is pretty easy and quick.

And no shop is perfect. So our system also automatically eliminate imperfections like on level lifts or uneven floors, ensuring an accurate straight as an arrow alignment the mid 40 <unk>.

Speaker Change: 44, hundreds alignment aligner is nimble versatile quick and smart.

Speaker Change: And it makes profitable alignment possible and many more shops.

Speaker Change: It's a great product.

Speaker Change: We keep driving to expand <unk> position with repair shop owners and managers offering more new products all developed by our value creation processes and we're confident it's a winning formula.

Speaker Change: And the Q4 results.

Speaker Change: So.

Speaker Change: Well, that's the quarter sales up.

Speaker Change: Two 2% back to level Opco operating margin of 22, 1% up 50 basis points, a new all time high for the fourth quarter, the tools group down, but narrowing the gap. The pivot is working our C&I operating margin 26, 6% up 150 basis points. Another profit high for an already high margin group.

Speaker Change: C&I operating margins up 70 operating earnings up 17, 4% operating margin of 16, 7% up 180 basis points also at a high resilience balance at vantage and results.

Speaker Change: It was an encouraging quarter.

Speaker Change: Now I'll turn the call over to Algoma Algoma. Thanks, Nick our consolidated operating results for the fourth quarter are summarized on slide six.

Speaker Change: Net sales of $1 billion $198 $7 million in the quarter was slightly above the 1 billion $196 6 million reported last year, reflecting an organic sales increase of $2 million.

Speaker Change: Signet strengthened sales to customers in critical industries, as well as gains with repair shop owners and managers offset the marginally lower sales of our franchise been network.

Speaker Change: Consolidated gross margin improved 140 basis points to 49, 7% from 48, 3% last year, reflecting increased sales and higher gross margin businesses as well as benefits from the company's RCI initiatives.

Speaker Change: Operating expenses as a percentage of net sales rose 90 basis points to 27, 6% from 26, 7% in 2023, primarily due to increased corporate and other operating costs.

Speaker Change: Operating earnings before financial services of $265 $2 million in the quarter compared to $257 $9 million in 2023 as a percentage of net sales operating margin before financial services of 22, 1% represented an improvement of 50 basis points from the 21, 6% reported last year.

Speaker Change: Financial services revenue of $105 million in the fourth quarter compared to $97 $2 million last year, while operating earnings of $66 7 million compared to $67 $9 million in 2023 consolidated operating earnings of $331 9 million compared to $325 8 million last year.

Speaker Change: As a percentage of revenues the operating earnings margin increased 30 basis points to 25, 5% in 2024.

Speaker Change: Our fourth quarter effective income tax rate of 22, 5% compared to 21, 4% last year net.

Speaker Change: Net earnings of $258 1 million compared to $255 $3 million in 2023, and net earnings per diluted share of $4 82 in the quarter compared to $4 75 per diluted share last year.

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

Speaker Change: Starting with C&I on slide seven.

Speaker Change: Sales of $379 2 million compared to $363 $9 million last year, reflecting a three 9% organic sales gain and $2 1 million of acquisition related sales, partially offset by $1 million of unfavorable foreign currency translation.

Speaker Change: Organic improvement is largely due to a gain in sales to customers serving critical industries, including a high single digit increase in specialty torque with respect to critical industries. In addition to higher torque product sales activities in aviation and general industries were encouraging during the period.

Speaker Change: Gross margin improved 180 basis points to 41% in the fourth quarter from 39, 2%. In 2023. This is largely due to increased sales volumes on higher gross margin critical industry sectors and savings from RCI initiatives.

Speaker Change: Operating expenses as a percentage of sales of 24, 3% in the quarter was unchanged from last year.

Speaker Change: Operating earnings for the C&I segment of $63 5 million compared to $54 1 million last year.

Speaker Change: The operating margin improved 180 basis points to 16, 7% from 14, 9% in 2020, turning now to slide eight.

Speaker Change: Sales in the snap on tools group of $506 $6 million compared to $513 3 million a year ago, reflecting a one 4% organic sales decline and $600000 of favorable foreign currency translation.

Speaker Change: The organic decrease reflects a low single digit decline in the United States business, partially offset by a mid single digit gains in our international operations again. This quarter. We believe that continued attenuation in a relatively modest year over year sales decline in the U S. Mobile network favorably demonstrates the resilience of this business given.

Speaker Change: Still uncertain environment.

Speaker Change: Gross margin declined 60 basis points to 44, 6% in the quarter from 45, 2% last year, mostly due to the decreased volumes and the effects of increased sales of lower gross margin products.

Speaker Change: Operating expenses as a percentage of sales improved 10 basis points to 23, 5% in the quarter from 23, 6% in 2023.

Speaker Change: Operating earnings for the snap on tools group of $106 9 million compared to $111 million last year. The operating margin of 21, 1% compared to 21, 6% in 2023.

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

Speaker Change: Sales of $456 6 million compared to $458 million in 2023, reflecting a one 6% organic sales increase partially offset by $1 5 million of unfavorable foreign currency translation.

Speaker Change: The organic gain includes a mid single digit increase in activity with OEM dealerships and a low single digit gain in sales of diagnostic and repair information products to independent repair shop owners and managers the ladder aided by the introduction of our new Apollo plus handheld diagnostic platform these gains more than offset.

Speaker Change: At a low single digit decline in sales of under car equipment.

Speaker Change: Gross margin improved 200 basis points to 47% from 45% last year, primarily reflecting increased sales of higher gross margin products, including a more favorable mix of software and benefits from RCI initiatives.

Speaker Change: Operating expenses as a percentage of sales rose 50 basis points to 24% from 19, 9% in 2023, largely due to increased personnel and other costs.

Speaker Change: The operating earnings for the <unk> group of $121 4 million compared to $113 $3 million last year. The operating margin improved 150 basis points to 26, 6% from the 25, 4% reported last year.

Speaker Change: Now turning to slide 10.

Speaker Change: Revenue from financial services increased $3 $3 million.

Speaker Change: Three 4% to $100 5 million from $97 $2 million last year.

Speaker Change: Financial services operating earnings of $66 7 million compared to $67 $9 million in 2023 financial services expenses were up $4 5 million from 2023 levels, including $4 4 million of higher provisions for credit losses.

Speaker Change: As a percentage of the average services portfolio the financial services portfolio expenses were one 3% in the quarter as compared to one 2% last year.

Speaker Change: And the fourth quarters of 2024 and 2023, the respective average yield on finance receivables were 17, 7% and 17, 8% while the average yield on contract receivables was nine 1% an eight 9% respectively.

Speaker Change: Total loan originations of $285 1 million in the fourth quarter represented a decrease of $18 million or five 9% from 2023 levels, including a five 8% decline in extended credit originations. The decrease in extended credit originations, mostly reflects lower sales of big.

Speaker Change: Ticket longer payback items.

Speaker Change: Moving to slide 11.

Speaker Change: Our year end balance sheet includes approximately $2 5 billion of gross financing receivables with $2 2 billion coming from our U S operation.

Speaker Change: For extended credit or finance receivables. The U S 60 day, plus delinquency rate of 2% is up 20 basis points from the fourth quarter of 2023 trailing 12 month net losses for the overall extend the credit portfolio of $66 3 million and represented a $3 three 2% of Outstandings at year end, while the.

Speaker Change: Delinquencies and net losses have been trending upward we believe that these portfolio performance metrics remain relatively balanced considering the current environment.

Speaker Change: Now turning to slide 12 for the quarter.

Speaker Change: Cash increased by $47 $2 million as compared to an increase of $42 2 million in the fourth quarter of last year.

Speaker Change: Cash provided by operating activities of $293 5 million in the quarter represented 111% of net earnings net cash used by investing activities of $40 2 million mostly.

Speaker Change: Mostly reflected net additions to finance receivables of $26 2 million and capital expenditures of $18 1 million.

Speaker Change: Net cash used by financing activities of $201 $5 million.

Speaker Change: Included cash dividends of $112 3 million and the repurchase of 315000 shares of common stock for $112 $5 million under our existing share repurchase programs.

Speaker Change: As of year end, we had remaining availability to repurchase up to an additional $429 4 million of common stock under our existing authorizations.

Speaker Change: Turning to slide 13.

Speaker Change: Trade and other accounts receivable increased $24 $3 million from 'twenty to 'twenty three year end days sales outstanding.

Speaker Change: Standing of 62 days compared to 60 days at year end 2023 inventories decreased $62 5 million from 2023 year end and on a trailing 12 month basis inventory turns of two four compared to two three at year end 2023 or.

Speaker Change: Our year end cash position of $1.365 billion compared to 1 billion $1 5 million at the end of 2023.

Speaker Change: In addition to our existing cash and expected cash flow from operations, we have more than $900 million available under our credit facilities and there were no amounts borrowed or outstanding under the credit facility. During the year, nor was any commercial paper issued or outstanding in.

Speaker Change: That concludes my remarks on our fourth quarter performance I'll now briefly review a few outlook items for 2025.

Speaker Change: With respect to corporate costs. We currently believe that the expenses in each quarter of 2025 will be relatively in line with those incurred in the fourth quarter of 2024 or about $27 million per quarter.

Speaker Change: Additionally, during 2025, we expect to incur approximately $6 million pre tax per quarter of increased non service pension costs, largely due to higher amortization of actuarial losses.

Speaker Change: These noncash costs will be recorded below operating earnings as part of other income and expense net on our statement of earnings.

Speaker Change: We expect that capital expenditures will approximate $100 million.

Speaker Change: And we currently anticipate that our full year, 2025% effective income tax rate will be in a range of 22% to 23%.

Speaker Change: Finally in 2025, our fiscal year will contain 53 weeks of operating results with the additional week occurring at the end of the fourth quarter.

Nick Pinchuk: This occurs every five or six years and historically that has not had a significant effect on our full year or fourth quarter total revenues net earnings on they'll call the call back over to Nick for his closing thoughts Nick Okay. Thanks.

Nick Pinchuk: Thanks Alvin.

Speaker Change: Yes.

Speaker Change: Well our fourth quarter.

Speaker Change: Progress against the uncertainty.

Speaker Change: The markets remain robust repair spending up the number of textbook wages up car park aging and via complexity rising.

Speaker Change: But the uncertainty remains created by the unpredictable macro environment, but we did make progress against the wind.

Speaker Change: Resilience was on display in the tools group the pivot succeeding in the GAAP shrinking.

Speaker Change: And the balance and breadth of our operations was evident in the performance of C&I and our C&I, both turning in solid quarters with gangbusters profitability resilience balance in progress written across the results.

Speaker Change: The tools group organic sales down one 4%.

Speaker Change: But making continuing progress and maintaining the strength of the network C&I.

Speaker Change: C&I sales up three 9% organically Oi margins of 16, 7% up 180 basis point add another high.

Speaker Change: Significant sales and profit gains in custom kits and precision toward confirming that we can roll out the snap on brand out of the garage successfully and very profitably.

Speaker Change: And finally, our F&I sales up one 6% Oi margins of 26, 6% a rise of 150 basis points, representing another record all driven by the promising and powerful quarters of software and committed RCI.

Speaker Change: It all came together for sales of one $198 7 million an increase of 0.2% are returned to positive territory. The overall gross margin was up 140 basis points to 49, 7% in the Oi margin was 22, 1% up 50 basis points yet another record.

Speaker Change: We are encouraged by the quarter and by our prospects going forward notwithstanding continuing uncertainty.

Speaker Change: We believe our markets will remain resilient and robust, reflecting the essential nature of the critical tasks at the fine.

Speaker Change: We believe we've not only maintained but have expanded our considerable advantages in product and brand and in people even have we even as we proceeded through the turbulence.

Speaker Change: We believe our snap on value creation processes do deliver value everyday day in and day out. We believe are capable team really is a difference maker battle tested enables a real advantage to consistently create positive outcomes overcoming obstacles, which happened over and over and we have all been witnesses.

Speaker Change: And we believe that all these positives will keep our enterprise moving forward extending and continuing its positive its positive trajectory throughout 2025.

Speaker Change: And for many years beyond.

Speaker Change: Before I turn the call over to the operator, I'm going to speak directly to our franchisees and associates I know many of you are listening.

Speaker Change: I've spoken today on the special nature of our enterprise resilient capable determined ringing progress from challenge you are the principal authors of all of that.

Speaker Change: For your success in moving our company forward prevailing in turbulence in proceeding with confidence you have my congratulations.

Speaker Change: For the capability and skill you Marshall every day on behalf of our team you have my admiration.

Speaker Change: And for your unwavering dedication to and strong belief in the future of our corporation.

Speaker Change: Have my thing.

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

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw it. Please press star then.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Our first question today comes from Scott timber of Roth MKS. Please go ahead.

Speaker Change: Good morning, guys and thanks for taking my questions Hi, Scott.

Speaker Change: Talking about tools I'm, just trying to flesh out how close we are to I guess, turning positive could you maybe talk about.

Speaker Change: The confidence at the shop level I know you talked about it.

Speaker Change: I guess still being high but.

Speaker Change: I guess there.

Speaker Change: It's high but cash poor has that scenario.

Speaker Change: <unk> actually gone backwards at all.

Speaker Change: Second part of that.

Speaker Change: Don't think it has gone backwards look I think I think it's like this I was just I was in a shop.

Speaker Change: A couple of weeks ago and talked to some franchisees the other day and talk to some other tax and other parts of the country in total franchisees all over the country and it's sort of like this I think people are pretty confident that vehicle repair is robust because of all the things I went through on my <unk>.

Speaker Change: <unk> you.

You'll see the bureau of Labor data, it's pretty much everybody is talking about we need more tax they got a lot of work I can't do with try get in your car repair and you'll find out what it means and then then you address the uncertainty and one thought might've been I think is that when the election resolved itself.

Speaker Change: Things went forward may be the I guess stated positive view of the current team towards business and particularly towards the people at work I mean, they said stuff like the other day about its technical education month then.

Speaker Change: We will find pads to Austin and also our alternate past higher education that will provide real skills for real careers.

And we will make technology worked for Americans not Americans worked for technology and stuff like that so those are music for the years of the tax but on the other hand.

Speaker Change: They see all of these initiatives and where everyday you get up and you got to read the paper on what's going on in Washington, and you hear words, like Panama, and and Green land in Gaza and all this stuff.

Speaker Change: And as I said in our remarks, and nobody knows what's up so you kind of have this idea that you like you know what it is it's like being on space Mountain at Disney World, You would get on space Mountain you get in a car and you were in the dark and of course going left or right and left and right and it turns you don't know where youre going but you know you are pretty confident that youre going to get to the right place at the bottom.

Speaker Change: So thats, where they are now they're kind of weakness see what's going to happen. So I think that's the only change between last time, there is still uncertain and they are still looking at short payback items, but I would think people often ask me. What do you think would have to happen to make them positive I think if things come down in.

Speaker Change: In Washington, and there will be more.

Speaker Change: Predictable activity and more quarters of advancement that didn't change all the time.

Speaker Change: I think that would be a big change.

Speaker Change: So that's where I see them now they are talking about the subdued.

Speaker Change: We like to administer.

Speaker Change: Don't order Ghana.

Speaker Change: Got it and as far as.

Speaker Change: Snap on and the actual pivoting are you guys fully pivoted and making sure we have more and.

Speaker Change: But I would say look I was encouraged by the one fourth now if you look at it each year.

Speaker Change: It's something that we came out of the box.

Speaker Change: Box down seven now than we were $7 seven down then were $3 seven down on our $1 or less.

Speaker Change: Organically and so I think thats, a pretty positive indication you could've said well it might have been better off.

Speaker Change: I'd never I am pretty confident of our direction, because we keep pivoting, we keep getting better at things, but I can't.

Speaker Change: Tell you the slope of the curve.

Speaker Change: <unk>.

Speaker Change: But I got it.

Speaker Change: Rowan is Oregon, it's worth.

Speaker Change: Oregon.

Speaker Change: Great and then just last question on C&I and <unk> could you tell us what the external sales werent for each.

Speaker Change: Organic basically.

Speaker Change: External sales I think you could say the external sales for RF and I was closer to what it is the C&I external sales were somewhere in the range of half of what what that something like that if it's still kind of in the same range, but around a little bit less than that.

Speaker Change: That's how it is because it was.

Speaker Change: The idea about C&I some of the stuff they'd produce inspect some of the tools tool stuff the torque stuff goes through the the tools group.

Speaker Change: Got you okay.

Speaker Change: Great Alright, that's all I have for now thank you.

Speaker Change: Okay.

Speaker Change: The next question comes from Sherif El today of Bank of America.

Please go ahead.

Sherif El: Hi, good morning.

Sherif El: Wondering if you could add a bit more color on the decline in originations is that mostly a function of product mix are you seeing customers finance most of the purchases overall.

Sherif El: Mostly mostly tool storage down.

Sherif El: That would fit.

Sherif El: So remember that as part of the pivot <unk> in other words that people are less willing I think this is a predictable outcome all been saying about customer preferences part of it is they want quick paybacks and otherwise they want stuff that will work right away, but also that stuff is when they buy to step off the ban on what we would call revolving accounts they pay it off at 16 weeks.

Sherif El: Are they paid cash orders they want and so that tends to be that tends to be so.

Sherif El: They spend more of their money on those shorter shorter items that they liquidate the obligation of 15 weeks and they don't get involved in like a three year deal.

Sherif El: That is the origination so the other factor is and you put your finger on it was very stage view is that the Apollo plus is at the lower end of the of the member I said it was the quickest payback, which means low lowest cost access to full intelligent diagnostics and more of that would be handled.

Sherif El: Ray than say like a Zeus, which is much more expensive like the top of the line. So the diagnostic line the new product, we introduced could be some portion of that could be handled not on EC. So those are all contributing but I will I will point out to you, though as well as I do on all these calls as originations are associated with sales.

Sherif El: <unk> off the van.

Speaker Change: Not sales to the ban.

Speaker Change: So they don't necessarily follow in the same timeframe, we sell a box to a band it doesn't necessarily sell off right away. Sometimes it is the guidance shops. It for a while to people. So it's an imprecise science, but what you are seeing most of all to answer quickly that five 9% reduction in originations in total.

Speaker Change: That was the number is principally driven by lower tool storage sales.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: The next question comes from Luke junk of Baird.

Luke Junk: Please go ahead good morning.

Speaker Change: And thanks for taking the questions.

You could double.

Speaker Change: Double click on the strength that youre seeing in especially torque right now and just at a high level I mean, it seems like that should benefit multiple areas across both critical industries and some of the growing opportunities within auto repair and maybe.

Speaker Change: Can you thoughts around investment there.

Speaker Change: I think an organic focus area, but can we see any additional M&A seems like mounts as Ben.

Speaker Change: Pretty good certainty at certain a place where we've looked at we've.

Speaker Change: The amount last year, which required I think in the fourth quarter of last year was a torque related torque controlled power tool company. So it gave us it was some of the technology that drove that Cte <unk> hundred to fruition one of the things. We're doing I think we would look to invest in there and so that would be.

Speaker Change: One of our principal quarters for exploration of things to invest because we really believe in that the other thing we're investing in that kind of a.

Speaker Change: Organic way.

Speaker Change: Is is to try to bring the operations together to create more combinations like <unk> 800 is.

<unk> of the technologies, we had in the years of nor bar.

Speaker Change: And the drives the basically front end of the power tools and mounts acquisitions and some of the some of the systems. We have in terms of in terms of torque control for Mt.

Speaker Change: And cooling that we had in power tools and that came together and created a superior tool that we believe has no equal.

Speaker Change: So that so youre going to see us look at acquisitions, but you're also going to see us trying to invest some money in matching those businesses that smashing, but trying to make sure theres a good irrigation of technologies related technologies between those businesses because we believe in sum total they are quite powerful.

Speaker Change: Good stuff and then for my follow up and I know this is hard to dial in precisely the Nic any thoughts on just the continued headwinds in big ticket right here and then the initiatives origination trend I should say and just as we think about the potential growth of the tools group this year.

Speaker Change: Much if any big ticket would you need if you were going to grow in line with the longer term, 45% and relative to the pivot to <unk>.

Speaker Change: <unk> ticket.

Speaker Change: Any way to kind of calibrate how much is left there to go after sure look I think there's a lot left in small ticket. It's a question of getting things that attract people in other words the idea behind the pivot is first and foremost I think.

Speaker Change: Is widening and bringing out more like attractive new product, what I call. We call Hey, you product hit products in the small ticket arena.

Speaker Change: Therefore, getting the customer excited about things he will actually pull the trigger on in this environment. That's really what's going on here. That's what we call pivot includes manufacturing and design and manufacturing and of course marketing the address it all up in a promotion, but so you can keep doing that and we believe that.

Speaker Change: It brings up that keeps us on an upward trend of course. If you are if you are having people shy away from big ticket items youre not firing completely on all cylinders.

Speaker Change: So.

Speaker Change: It's hard for me to answer that trajectory I think with pivoting, we keep going positive because we know how to improve we probably don't fire on all cylinders, so people get a little more comfortable.

Speaker Change: But I don't think its a matter of if we can keep I think there's a what I would call almost inexhaustible upward trend in the pivot.

Speaker Change: It's just we'd like to have all our products because our tool storage products are powerful.

Speaker Change: And so if we can get them engage without even more stuff and people would buy even more so it's a hard thing to answer but I do think even if we didn't get the uncertainty broken we believe we can keep going.

Speaker Change: Uncertainty breaks then there would be a more normalization.

Speaker Change: Not saying, we can't get back to normal without without breaking uncertainty, but take longer that's all.

Speaker Change: Got it thanks Nick.

Moderator: Our next question comes from Bret Jordan of Jefferies. Please go ahead.

Bret Jordan: Hey, good morning, guys now Brad let.

Speaker Change: Let me throw the tariff question out there for you and I guess sort of relative positioning around what may or may not happen here.

Speaker Change: <unk> domestic mix versus your competitors, how do you see yourself positioned and what's the impact.

Speaker Change: Well you tell me, how the tariffs play out and I'll tell you what the impacts what I was looking for the answer to.

Speaker Change: I don't know.

Speaker Change: But look I think let me state that we certainly are more insulated.

Speaker Change: From import tariffs on imports then.

Speaker Change: Then most most so a pair of.

Speaker Change: Wide tariffs world.

Speaker Change: A lot of imported.

Speaker Change: Sources, then I think we make out pretty well.

Speaker Change: Because I like our chances in that situation that doesn't mean, we're totally immune to it you know we do we do have tariff costs right now we've been eating them for years, we have re import some stuff that attracts tariffs, but generally we make in the markets, where we sell in a huge portion of our product line is made in the United States are in pretty good shape.

Speaker Change: If you talk to any other tariffs.

Speaker Change: <unk> tariffs who knows it's Ned.

Speaker Change: You never know what people are going to do but I think this anr first rodeo as I said in my call. I mean, you know our ways around that when we saw when we saw this stuff come up we're already thinking about ways to kind of minimize and optimizing that situation and there are paths to do that so we're not shaken in our boots over the whole thing.

Speaker Change: And then on the relative strength of international tools versus U S. I mean sort of what do you attribute that to is there less competition. There is no harbor freight or macro in those markets. So it's a different competitive landscape or what would actually there.

Speaker Change: Who did you say.

Speaker Change: Mapco Harbor freight, Matt or people, who are selling more tools in the U S market that are not internationally.

Speaker Change: I don't look I don't I don't think.

Speaker Change: I don't think Thats the situation.

Speaker Change: I don't think that.

Speaker Change: Nobody really says that that's not the situation in the U S and U S simply associated to think about the uncertainties that are in the U S.

Speaker Change: The border.

Speaker Change: The IV and now you do have the two wars and inhabit other environments, Australia, I think thinks its thinks of itself as being insulated from all of that.

Speaker Change: And you have the election, they have what I would call the rapid fire ideas out of Washington.

Speaker Change: You have the rise in prices. So I think the uncertainty kind of inflict the U S to a greater extent than anything else.

Speaker Change: Our U K business seems to be more solid and a lot of this stuff.

Speaker Change: Is where you come from so the international businesses I think if you go back and look at it they have been suffering for a while now they've come back somewhat so youre seeing some of that snapback there in that situation I don't think the competitive.

Speaker Change: Environment changes that much really in <unk>.

Speaker Change: Either place because you have other competitors that are national competitors. Now for example, if you are in Australia, you've got you've got people there that people prefer and technicians don't own their own tools that are quite the same extent as they do here.

Speaker Change: Have all of that kind of stuff. So I don't think theres much the competition isn't the variance between the organizations between the locations.

Speaker Change: Alright, great. Thank you.

Speaker Change: The next question comes from David Macgregor of Longbow Research. Please go ahead.

Speaker Change: Hey, Good morning. This is Joe Nolan on for David.

Speaker Change: Okay, Yeah, that's the parents.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Sorry, Marty.

Speaker Change: Oh is that I'll come to the party.

Speaker Change: Thank you I appreciate it.

Speaker Change: So first just a strong quarter for the critical industries and for the torque tools business.

Speaker Change: <unk> invested in some capacity there so I assume youre shipping against backlog orders I was just wondering what youre seeing in terms of order activity and.

Speaker Change: The order activity is pretty good I mean, we do have some backlog there.

Speaker Change: It isn't and it had been higher before you know it.

Speaker Change: It built up and when we we put on a new we put our new expansion that we kind of we didn't liquidate the backlog, but we more normalize it so I wouldn't call. It a buildup of backlog, but the backlog has been pretty solid.

Speaker Change: So I'm pretty I'm pretty positive about the critical industries and the thing about it is that it seems like we have increasing demand all the time because the.

Speaker Change: The idea of complex customized kidding.

Speaker Change: Seems to have high demand and growing.

Speaker Change: Everybody and their brothers seems to want to have a set that matches. The particular problem in that they have and we can put them right on target and.

Speaker Change: And we may be the only person who really does that very effectively plus it includes a whole bunch of snap on tools, which creates a whole other cache to the combined kit.

Speaker Change: So we love that business it seems that it was up it was up.

Speaker Change: Substantially in the quarter I'm not going to give you the number but I can tell you that business with.

Speaker Change: Bananas in the quarter, so I feel pretty good about it and it's very profitable.

Speaker Change: Yes, that's great.

Speaker Change: And I know you guys don't provide guidance, but just thinking about that business as margins into 2025, just any of the moving parts. There obviously the strength in critical industries.

Speaker Change: Third for margin. So just anything more you can provide.

Speaker Change: All I can tell you is what.

Speaker Change: What I tried to make in this quarter was we had two things.

Speaker Change: We basically had the tools group, returning pivoting and narrowing the gap of course, it was down some much more of a sliver than it had been down but the results 20 to 22, 1% up 50 basis points and if you really looked at last year's number.

Speaker Change: You would see that there might've been some boost some little help there from some of the some like special items like legal settlements and stuff like that and equity. So it was up tremendously.

Speaker Change: Ah nicely and that was rolled out by the other two groups really having wowser quarters <unk>.

<unk> ability wise for sure and that profitability was rooted in the idea that they are more profitable divisions in the case of ours in either software area was going gangbusters and in the <unk> and in the C&I group the customer towards the critical industries those customized kit.

Speaker Change: <unk> and though on top of it like I said in RCI and out of that but this is probably missed them my comments across RF ni.

Speaker Change: A great majority of the businesses, even the hardware businesses were up over 100 basis points and that was RCI rapid continuous improvement so going forward. What you have is.

Speaker Change: Good one way for those profitable businesses, and then seemingly good momentum of RCI across the corporation I hope nobody misses that in this quarter.

Speaker Change: Yes.

Speaker Change: Great.

Speaker Change: And then just quickly on the tools group.

Speaker Change: Apologies if I missed this but did you talk about sell in versus sell through in the quarter.

Speaker Change: I did not its about the same.

Speaker Change: Got it.

Speaker Change: Alright, great. Thanks, I'll pass it on.

Speaker Change: Oh.

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

Speaker Change: Thank you all for joining us today, a replay of this call will be available shortly on snap on dot com as always we appreciate your interest in snap on good day.

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