Q2 2026 Snap-on Inc Earnings Call

July 23, 2026

Operator: Good day, and welcome to the Snap-on Incorporated 2026 Q2 Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the call over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Speaker #1: Good day, and welcome to the Snap-on Inc 2026 second-quarter results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker #1: After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press *1 on your touchstone phone. To withdraw your question, please press *2.

Speaker #1: Please note that this event is being recorded. I would now like to turn the call over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Speaker #2: Thank you, Cole, and good morning, everyone. We appreciate you joining us today as we review Snap-on second-quarter results, which are detailed in our press release issued earlier this morning.

Sara Verbsky: Thank you, Cole, good morning, everyone. We appreciate you joining us today as we review Snap-on's Q2 results, which are detailed in our press release issued earlier this morning. We have on the call Nick Pinchuk, Snap-on's Chief Executive Officer, and Aldo Pagliari, Snap-on's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance. Aldo will then provide a more detailed review of the financial results. After Nick provides some closing thoughts, we will take your questions. As usual, we provided slides to supplement our discussion. These slides can be accessed under the Downloads tab in the webcast viewer, as well as on our website, snapon.com, under the Investors section. The slides will be archived on our website along with a transcript of today's call.

Speaker #2: We have on the call Nick Pinchuk, Snap-on's Chief Executive Officer, and Aldo Pagliari, Snap-on's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance.

Speaker #2: Aldo will then provide a more detailed review of the financial results. After Nick provides some closing thoughts, we'll take your questions. As usual, we provide a slide to supplement our discussion.

Speaker #2: These slides can be accessed under the Downloads tab in the webcast viewer, as well as on our website, snap-on.com, under the Investor section. The slides will be archived on our website along with the transcript of today's call.

Speaker #2: Any statements made during this call relative to management's expectations, estimates, or beliefs are that otherwise discussed; management or the company's outlook, plans, or projections are forward-looking statements and actual results may differ materially from those made in such statements.

Sara Verbsky: 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, actual results may differ materially from those made in such statements. Additional information and the factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings. This presentation includes non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our earnings release issued today, which can be found on our website. With that said, I would now like to turn the call over to Nick Pinchuk. Nick?

Speaker #2: Additional information and the factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings.

Speaker #2: Finally, this presentation includes non-get measures of financial performance, which are not meant to be considered in isolation or as a substitute for their gap counterparts.

Speaker #2: Additional information regarding these measures is included in our earnings release issued today, which can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk.

Speaker #2: Nick?

Speaker #3: Thanks, Sara. Good morning, everyone. This was a summer quarter, testimony that Snap-on executes even in a blizzard and that our operations represent a clear and credible beacon showing a continuing path for a positive trajectory as we go forward.

Nick Pinchuk: Thanks, Sara. Good morning, everyone. This was some quarter. Testimony that Snap-on executes even in a blizzard that our operations represent a clear and credible beacon showing a continuing path for a positive trajectory as we go forward. The quarter, I would say, was marked with ongoing momentum more green shoots. Progress against the whirlwind. I mean, this is a turbulent time. I don't know. I am not sure I have seen more elements of uncertainty packed into a single quarter. Ukraine, inflation, fluctuating tariffs, restructured supply chains, now piling on the impasse with Iran. It is really something. Snap-on shook it all off, punching right through the difficulties or the fog with emphasis, fortified by the inherent.

Speaker #3: The quarter I'd say was marked with ongoing momentum and more green shoots progress against the whirlwind. I mean, this is a turbulent time. I don't know.

Speaker #3: I'm not sure I've seen more elements of uncertainty packed into a single quarter. Ukraine, inflation, fluctuating tariffs, restructured supply chains, and now piling on the impasse with Iran, really strong.

Speaker #3: But Snap-on shook it all off, punching right through the difficulties or the fog with emphasis. Fortified by the inherent and that was because we were fortified by the inherent and enduring positives our markets, the rising complexity of vehicles, the aging car park, the growing demand for precision and customization in critical industries, and the rise of technology, software that makes the special and the proprietary more powerful.

Nick Pinchuk: That was because we were fortified by the inherent and enduring positives our markets, the rising complexity of vehicles, the aging car park, the growing demand for precision and customization in critical industries, and the rise of technology software that makes the special and the proprietary more powerful. You put all of that together with our decisive advantages in product and brand and people, amplify it with our Snap-on value creating processes, driving improvements, it makes for a powerful combination that creates an encouraging quarter and a very promising future. It was. Now, I'll take you through all that and hitting some of the highlights and giving you my perspectives on what it all means. Aldo will give you a detailed review of the financials. Let's start with the results. I believe they testify to all that I just said.

Speaker #3: And you put all of that together with our decisive advantages in product and brand and people, amplify it with our Snap-on value, creating processes, driving improvements.

Speaker #3: It makes for a powerful combination that creates an encouraging quarter. And a very promising future. So it was. Now, I'll take you through all that.

Speaker #3: And here's some of the highlights and giving you my perspectives on what it all means. And Aldo will give you a detailed review of the financials.

Speaker #3: So let's start with the results. I believe they testified to all that I just said. Second quarter, as reported, sales were $1,235.1 million, up 55.7 million, or 4.7%, including 11.5 million from the recent additions of high force and diesel laptops, 8.7 million in favorable foreign currency translation, and an organic gain of 3%.

Nick Pinchuk: Q2 as reported sales were $1,235.1 million, up $55.7 million or 4.7%, including $11.5 million from the recent additions of Hi-Force and Diesel Laptops, $8.7 million in favorable foreign currency translation, and an organic gain of 3%. The OpCo operating margin or OpCo operating income, or OCI, we'll call it from now on, was $268 million. The OpCo operating margin for the quarter was 21.8% compared to the 22% last year, down slightly, but still strong, especially in this environment. The gross margin was an attention-getting 51.4%, 90 basis points higher than last year. The overall story of the period was an encouraging performance, overcoming the cost pressures and funding the investments for the future. For FinCo, the OCI was $67.5 million versus the $68.7 million in 2025. When you combine that with our OpCo OCI, it resulted in a consolidated operating margin of 25.2%.

Speaker #3: The outgoing operating margin or operating income or OI is, we'll call it from now on, was $268 million. And the outgoing operating margin for the quarter was 21.8% compared to the 22% last year.

Speaker #3: Down. Down slightly. But still strong. Especially in this environment, the gross margin was an attention-getting 51.4%, 90 basis points higher than last year. So the overall story of the period was an encouraging performance overcoming the cost pressures and funding the investments for the future.

Speaker #3: For FinCo, the OI was 67.5 million versus the 68.7 million in 2025. 2025. And when you combine that with our opco OI, it resulted in a consolidated operating margin of 25.2%.

Speaker #3: And the EPS was $4.96, up 24 cents or 5.1%. Another positive. So those are the numbers. Now let's turn to the markets. Vehicle repair is still a great place to be.

Nick Pinchuk: The EPS was $4.96, up $0.24 or 5.1%, another positive. Those are the numbers. Now let's turn to the markets. Vehicle repair is still a great place to be. Cars and trucks are essential parts of our lives, but keeping them on the road is more and more of a challenge. The park is getting older every day. The models are getting more complex with each new launch. I would say, I've said it before, I think this is the golden age of vehicle repair, and the numbers tell the story. Spending on repair, technician hours worked, and mechanic wages are all up. The garages are pumping and the techs remain cash rich. In this environment, they still remain confidence poor. The uncertainty hasn't gone away. A single scan of the morning news will tell you that.

Speaker #3: Cars and trucks are essential parts of our lives. But keeping them out of the road is more and more of a challenge. The part that's getting older every day, the models are getting more complex with each new launch.

Speaker #3: And so I would say this is I've said it before, I think this is the golden age of vehicle repair and the numbers tell the story.

Speaker #3: Spending on repair technicians, our technician hours works at work and mechanic wages are all up. So the garages are pumping and the techs remain cash-rich.

Speaker #3: But in this environment, they still remain confidence poor. The uncertainty hasn't gone away. A single scan on a morning news will tell you that.

Nick Pinchuk: Our customers, the technicians, remain reluctant to take on longer-term obligations on big ticket purchases. Tool storage volume and the associated originations are still down. The mechanics need to meet the rising complexity. Our pivot to quicker payback items is working. Overall volumes are up. You see, the technicians really are a great segment, resilient and period by period. That's what's playing out in the tools group. Just to sort of anecdote this, recently, I had the opportunity to visit franchisees in the field, speak with some shop owners and technicians, and I'll tell you, I came away more convinced than ever that this is a great place to be. The franchisees were pumped and excited about their current prospects and very optimistic about their future. The independent shop owners, they could only talk about how to get more technicians.

Speaker #3: So our customers, the technicians remain reluctant to take on longer-term obligations and big-ticket purchases. Full storage volume and the associated originations are still down.

Speaker #3: But the mechanics need to meet the rising complexity so our pivot to quicker payback items is working. Overall volume is up. You see the technicians really are a great segment.

Speaker #3: Resilient and period by period, that's what's playing out in the tools group. Recently, I had the just to sort of anecdotal, these recently I had the opportunity to visit franchisees in the field.

Speaker #3: Speak with some shop owners and technicians. And I'll tell you, I came away more convinced than ever that this is a great place to be.

Speaker #3: The franchisees were pumped and excited about their current prospects and very optimistic about their future. The independent shop owners, they can only talk about how to get more technicians.

Speaker #3: They wanted as many as they could find. And the techs said they were slammed. Telling me that repairs are getting way more difficult, especially troubleshooting and accessing and accessing and repairing.

Nick Pinchuk: They wanted as many as they could find. The techs said they were slammed, telling me that repairs are getting way more difficult, especially troubleshooting, accessing, and repairing. Troubleshooting, accessing, and repairing newer systems. That means complexity is only going to get worse from a repairability level. Getting better access in tight quarters to speed their work was high on their list, and we're putting them right on target. One tech said, we brought out this new power tool, the NanoAxcess. You can fit it in your pocket. He says, I have my new NanoAxcess power tool, and the other day, it helped me shave 90 minutes off a repair. We need more tools like that. Snap-on speeds the work and shows everyone I'm a serious professional. That is music to my ears, because this is who we are and what we do.

Speaker #3: Troubleshooting, accessing, and repairing newer systems. Getting better at that means complexity is only going to get worse from a repairability level. Getting better access and tight quarters to speed their work was high on their list.

Speaker #3: And we're putting them right on target. One tech said, "I have my new we brought out this new power tool, the NanoAxis. You can fit it in your pocket." He says, "I have my new Nano I have my new NanoAxis power tool." And the other day, it helped me shave 90 minutes off a repair.

Speaker #3: We need more tools like that. Snap-on speeds the work and shows everyone I'm a serious professional.

Speaker #2: This is music to my ears, son.

Speaker #3: You know, because this is who we are. And what we do. We go to work where the work is happening. We observe the techs.

Nick Pinchuk: We go to where the work is happening. We observe the techs. We identify the toughest and most complex tasks. We develop customized solutions that make the work easier, faster, and more productive. The techs line up to gain that advantage. One of the reasons why the pivots work. The other side of auto repair is where the Repair Systems & Information Group, or RS&I operates. It's where we're expanding our presence with repair shop owners and managers, increasing and enabling our broader array of products all to help the garages meet the broader challenges of today's vehicles. The acquisition of Diesel Laptops, giving our team more to sell in the heavy duty arena is a great example of that effort. We like RS&I's potential to moving forward.

Speaker #3: We identify the toughest and most complex tasks, and we develop customized solutions that make things that make the work easier, faster, and more productive.

Speaker #3: And the techs line up to gain that advantage. One of the reasons why the pivots work. The other side, auto repairs, where the repair system information group or RS&I operates.

Speaker #3: It's where we're expanding our presence with repair shop owners and managers. Increasing and enabling our broader way of product, all to help the garages meet the broader challenges of today's vehicles.

Speaker #3: The acquisition of diesel laptops given our team more to sell in the heavy-duty arena is a great example of that effort. We like RS&I's potential to move forward.

Nick Pinchuk: The repair shop footprint is changing and upgrading, both at dealerships and independent shops. RS&I is making the most of that trend with proprietary data-driven solutions that are the engines behind our intelligent diagnostic software and our Mitchell 1 software offerings. For right now, independent shops are continuing to invest in adopting products that expand their capabilities. For example, this quarter, our new AC recycling machine, aligned with the refrigerants used in modern vehicles, and at the same time, offer new autonomous features that boost shop productivity. New design helps garages drive more repair orders, and was quite popular with the independents. Now for our OEM dealers. There's some hesitancy for capital expenditures.

Speaker #3: The repair shop footprint is changing. And upgrading, both at dealerships and independent shops. And RS&I is making the most of that trend with proprietary data-driven solutions that are the engines behind our intelligent diagnostics software and our mutual one software offerings.

Speaker #3: Right now, independent shops are so but for right now, independent shops are continuing to invest in adopting products that expand their capabilities. For example, this quarter, our new ACV cycling machine aligned with the refrigerant used in modern vehicles and at the same time, offer new autonomous features that boost shop productivity.

Speaker #3: The new design helps garages drive more repair orders. And it was quite popular with the independents. Now for our OEM dealers, there's some hesitancy for capital expenditures.

Speaker #3: Owners and managers know they need upgrades to match the new model, but a lot of them are keeping their power dry waiting to take their lead from the manufacturers.

Nick Pinchuk: Owners and managers know they need upgrades to match the new model. A lot of them are keeping their power dry, waiting to take their lead from the manufacturers. The automakers have slowed their program launches. The dealer side of the business is in a low spot. Having said that, RS&I understands the market. It has an unrivaled product portfolio that is unique and positioned to take full advantage of the segment as it evolves. Now let's speak of the world outside the garage in critical industries. This is where commercial and industrial operates. The Commercial & Industrial Group, C&I Group operates. This is our business with the largest international presence, serving the critical and the essential, where the penalty for failure is high. That world is advancing, adopting new technologies and creating systems that are more and more sophisticated.

Speaker #3: And the automakers have slowed their program launches. So the dealer's side of the business is in a low spot. Having said that, RS&I understands the market.

Speaker #3: And it has an unrivaled product portfolio that is unique and positions to take full advantage of the segment as it evolves. Now let's speak to the world this is where commercial and industrial operates.

Speaker #3: The commercial industry, CNI Group operates. This is our business with the largest international presence, serving the critical and the essential where the penalty for failure is high.

Speaker #3: And that world, it's advancing. Adopting new technologies. And creating systems that are more and more sophisticated. It's an environment where the appetite for precision and customization is growing every day.

Nick Pinchuk: It's an environment where the appetite for precision and customization is growing every day. Commercial & Industrial Group is right on that trend. Sales were up big across a number of sectors and geographies at Commercial & Industrial Group. The critical industries are booming, and our custom-built kits aimed at specific challenges are in strong demand. It's also a time for our specialty torque division. The rising of automated systems requires tighter tolerances. Our expanding torque operation can fill that bill exactly. From large hydraulic and tensioning systems to lighter force applications where speed and control are challenging, like in our Mountz, which we acquired a couple of years ago, and essential. Challenging and essential. Snap-on increasingly has the product lines to cover the waterfront and meet the growing trend for precision.

Speaker #3: And CNI is right on that trend. Sales were up. Big. Across a number of sectors and geographies at CNI. The critical industries are booming.

Speaker #3: And our custom-built kits aimed at specific challenges are in strong demand. This is also the time for and it's also a time for our specialty torque division.

Speaker #3: Because the rising of automated systems requires tighter tolerances. And so our expanding torque operation can fill that bill exactly from large hydraulic and tensioning systems to lighter force applications where speed and control are challenging.

Speaker #3: Like in our mount acquisition, which we acquired a couple of years ago. And essentially, a challenging and essential. Snap-on increasingly has the product lines to cover the waterfront and meet the growing trend for precision.

Speaker #3: For the international landscape outside the garage, the Asia-Pacific and European operations rebounded nicely. And stabilized against some backdrop of a still ever-changing supply chain.

Nick Pinchuk: For the international landscape outside the garage, the Asia Pacific and European operations rebounded nicely and stabilized against a backdrop of a still ever-changing supply chain. In that orb, Snap-on is advantaged by making in the markets where we sell and by our 36 factories around the world giving us considerable flexibility. Those strengths were clearly in play in this quarter, and the Commercial & Industrial Group results are a dramatic confirmation. Overall, in both vehicle repair and the critical industries, the quarter demonstrates the strong resilience of our markets and our significant ability to take advantage. The period also shows the power of Snap-on value creation processes, safety, quality, customer connection, innovation, and rapid continuous improvement, or RCI. It all came together, creating popular new products and continuing improvements. I mean, gross margins are up 90 basis points. Well, that's the macro overview. Now let's move to the segments.

Speaker #3: In that order, Snap-on is advantaged by making it in the markets where we sell and by our 36 factories around the world giving us considerable flexibility.

Speaker #3: Those strengths were clearly in play in this quarter. And the CNI results are a dramatic confirmation. So overall, in both vehicle repair and the critical industries, the quarter demonstrates the strong resilience of our markets.

Speaker #3: And our significant ability to take advantage. The period also shows the power of Snap-on value creation processes. Safety, quality, customer connection, innovation, and rapid continuous improvement.

Speaker #3: Our RCI and it all came together creating popular new products and continuing improvements. I mean, gross margins are up 90 basis points. Well, that's the macro overview.

Speaker #3: Now let's move to the segments. I think we'll start with CNI. Sales were 394.8 million. An increase of 48 million or 13.8%. Now that includes 6.8 million from our high force acquisition, 2.5 million of favorable foreign currency, and our organic gain of 11%.

Nick Pinchuk: I think we'll start with Commercial & Industrial Group. Sales were $394.8 million, an increase of $48 million or 13.8%. That includes $6.8 million from our Hi-Force acquisition, $2.5 million of favorable foreign currency, and an organic gain of 11%. 11%. Hearing that, there's only one reasonable thing to say. Boom shakalaka. I'm telling you, we love it. I'll tell you, there are gains and improvements all across the business. Double-digit increases in Asia Pacific, in the European hand tools business, in specialty torque and power tools. Wowza. The demand for custom kits and precision torque and innovative power tools is strong. What we always said would happen.

Speaker #3: 11%. Now, hearing that, there's only one reasonable thing to say. Boom, Jackalaca. I'm telling you, we love it. I'll tell you, there are gains and improvements all across the business.

Speaker #3: Double-digit increases in Asia-Pacific. In the European hand tools business. And specialty torque and power tools. Wowza. The demand for custom kits and precision torque and innovative power tools is strong.

Speaker #3: What we always said would happen. Finally, the industrial business was up mid-single digits. But that includes continued weakness in the military sector, which somewhat attenuated as a demonstration of considerable strength.

Nick Pinchuk: Finally, the industrial business was up mid-single digits, that includes continued weakness in the military sector, which somewhat attenuated as a demonstration of considerable strength, and I mean considerable strength, in heavy duty natural resources and in both the US and international aviation. From an earnings perspective, Commercial & Industrial Group operating income was $66.5 million, it improved $19.6 million or 41.8%. Yes, 41.8%. The operating margin, it was a new record, 16.8%, 330 basis points above last year. The gross margin, in the midst of material cost inflation and inflation, it was 42.6%. That's up 260 basis points over last year. We said Snap-on could expand out of the garage, it's doing just that. It's doing it profitably. Innovative new products from our Murphy, North Carolina, were a major driver of that. One example was our all-new CTR829.

Speaker #3: And I mean considerable strength in heavy-duty natural resources and in both the US and international aviation. From an earnings perspective, CNI operating income was 66.5 million.

Speaker #3: Improved 19.6 million or 41.8%. Yes. 41.8%. And the operating margin, it was a new record. 16.8%. 330 basis points above last year. And the gross margin in the midst of material cost inflation and inflation it was 42.6%.

Speaker #3: That's up 260 basis points over last year. We said Snap-on could extend out of the garage and it's doing just that. And it's doing it profitably.

Speaker #3: Innovative new products from our merging North Carolina were a major driver of that. One example was our all-new CTR829. That's a quarter-inch drive, 14.4-volt ratchet with an extra long wrench stretching out 11 inches to reach into those isolated spaces.

Nick Pinchuk: That's a quarter-inch drive, 14.4 volt ratchet with an extra long wrench stretching out 11 inches to reach into those isolated spaces. It's the little brother of the previously launched 3/8 inch model, but that doesn't mean it's weak. This baby produces 40 foot-pounds of torque and operates at 400 RPMs, all out of a small, compact frame that houses a bright LED ring illuminating the workspace. Now, techs can reach further under the dash and between fenders, engaging bolts with ease. When they hit the paddle trigger, boom, the 829 makes quick work of the task. Reach, power, and speed. It's a winning tool, and I'll tell you, the techs say it so. During the quarter, we also released the new 3/8 inch digital torque wrench. Remember I said precision is important.

Speaker #3: It's a little brother of the previously launched 3/8-inch model. But that doesn't mean it's weak. I mean, it's safe. It produces 40 foot-pounds of torque and operates at 400 RPMs.

Speaker #3: All out of a small compact frame that houses a bright LED ring illuminating the workspace. Now, techs can reach further under the dash and between fenders and engaging bolts with ease.

Speaker #3: And when they hit the paddle trigger, boom. The 829 makes quick work of the task. Reach. Power and speed. It's a winning tool. And I'll tell you, the techs say it so.

Speaker #3: During the quarter, we also released a new 3/8-inch digital torque wrench. Remember, I said precision is important. The ATEC 135. It's the latest entry in our already popular ATEC product line.

Nick Pinchuk: The ATECH 135 is the latest entry in our already popular ATECH product line, and it's loaded with popular features that make a difference, easy navigation, a durable housing, compact head design, and incredible precision. It was designed in our City of Industry facility in California, and it offers a new color display, it's a brilliant screen that provides better viewing from any angle and makes a crystal clear image, this is important, even in direct sunlight. The unit, it boasts 135 foot-pounds of torque, and it's the biggest in the ratchet industry. The 135 is another tool that makes torque tasks much easier. Precision torque is on the rise, and Snap-on is leading the way. Let's see C&I. Significant growth across the global footprint. Sales up 13.8%, 11% organically. The second straight quarter of big increases in sales and operating income of 16.8%, 330 basis points improvement.

Speaker #3: And it's loaded with popular features that make a difference. Easy navigation, a durable housing, compact head design, and incredible precision. It was designed in our city of industry facility in California.

Speaker #3: And it offers a new color display, a brilliant screen that provides it's a brilliant screen that provides better viewing from any angle. And makes a crystal clear image this important, even in direct sunlight.

Speaker #3: And the unit, you know, it boasts 135 foot-pounds of torque. And it's the biggest in the ratchet industry. The 135 is another tool that makes torque tasks much easier.

Speaker #3: Precision torque is on the rise. And Snap-on is leading the way. Well, that's CNI. Significant growth across the global footprint. Sales up 13.8%, 11% organically.

Speaker #3: The second straight quarter of big increases in sales. And operating income is 16.8% of 330 basis points improvement. That's CNI. All-time record. Snap-on brand is extending out of the garage to serve the critical and CNI is the rocket ship that's making it so.

Nick Pinchuk: A C&I all-time record. The Snap-on brand is extending out of the garage to serve the critical, C&I is the rocket ship that's making it so. Now let's turn to the Tools Group. Group sales were $508.8 million, up organically 3%. The green shoots continue. Increases in both the US and international operations, pivoting to quicker payback items, the power tools, and the torque wrenches in their lineup. Operating income was $115.1 million compared to $116.7 last year. The operating margin was a respectable but still down 22.6%. Volumes were strong, but they were driven from products made by the other Snap-on divisions. Like the aforementioned power tools and torque, where strong corporate margins for those tools as a whole are shared across the operations, making the Tools Group margins thinner. The Group started sales this quarter, were part of the pivot to match the customer's changing preferences.

Speaker #3: So now let's turn to the tool scoop. Group sales were 508.8 million. Up organically 3%. The green shoots continue. Increases in both the US and international operations.

Speaker #3: Pivoting to quicker payback items. The power tools and the torque wrenches in their lineup. Operating income was 115.1 million compared to 116.7 last year.

Speaker #3: The operating margin was a respectable but still down 22.6%. Volumes were strong. But they were driven from products made by the other Snap-on divisions.

Speaker #3: Like the aforementioned power tools and torque. Were strong corporate margins for those tools as a whole. Our shared across the operations. Making the tools group margins thinner.

Speaker #3: The group's starter sales this quarter were part of the pivot to match customers' changing preferences. I guess it's not changing now. They've been there for a little while.

Nick Pinchuk: I guess it's not changing now. They've been there for a little while. Launching products that simplify some of the non-standard solutions that challenge repair on modern cars. Actually, when I was talking to the techs, they talked about this quite effusively. They said, Well, we love your product that attacks some of the special and more difficult tasks we have. For instance, something as simple as removing lug nuts can evolve into a thorny procedure. Chevrolet put chrome covers on the wheel nuts for appearance. Well, these caps often swell and deform from exposure to moisture or if you're around here in the ocean, harsh winters. When that happens, traditional sockets won't fit, and valuable garage time is wasted cutting that material away, all for a very routine procedure.

Speaker #3: And launching products that simplify some of the non-standard solutions that challenge repair on modern cars. Actually, when I was talking to the techs, they talked about this.

Speaker #3: Quite effusively. They said, oh, we love your product that attacks some of the special and more difficult tasks we have. For instance, something as simple as removing a lug nut can evolve into a thorny procedure.

Speaker #3: Simple OEMs put chrome covers on the wheel nuts for appearances. Well, these caps often swell and deform from exposure to moisture or if you're sitting around here in an ocean.

Speaker #3: Harsh winters. When that happens, traditional sockets won't fit. And valuable garage time is wasted cutting that material away. All for a very routine procedure.

Speaker #3: So seeing the problem, we developed a seven-piece drive socket set that has in-between metric sizes from 16.5 millimeters to 22.5 millimeters. Providing just enough change.

Nick Pinchuk: Seeing the problem, we developed a seven-piece drive socket set that has in-between metric sizes from 16.5 millimeters to 22.5 millimeters, providing just enough change in size to fit the task, providing solid engagement, enabling rapid improvement, and driving a quick repair. I know it seems trivial, but it's a manufacturing challenge to make these special sockets that was accommodated by the unique flexibility of our Milwaukee plant, and it was a tremendous hit with the techs. It's quickly become one of our million-dollar hit products. We also recently introduced this seven-piece swivel Torx impact flex socket set. It's ideal for difficult jobs where techs have to access high-strength Torx fasteners in tight and obstructed areas. That's a combination that's quite common in European high-performance vehicles. Places like Volkswagen Alley steering columns, BMW caliper brackets, Mercedes front brake calipers, and Jaguar drive shafts.

Speaker #3: Change in size. To provide to fit the task. Providing and providing solid engagement. Enabling rapid improvement and driving a quick repair. I know it seems trivial.

Speaker #3: But it's a manufacturing challenge to make these special sockets that was accommodated by the unique flexibility of a Milwaukee plant. And it was a tremendous hit with the techs.

Speaker #3: And it's quickly become one of our million-dollar hit products. We also received we also introduced a we also recently introduced a seven-piece swivel torque impact flex socket set.

Speaker #3: It's ideal for difficult jobs where techs have to access high-strength torques fasteners. In tight and obstructed areas. That's a combination that's quite common in European high-performance vehicles.

Speaker #3: Places like Volkswagen and Audi steering columns. BMW caliber brackets. Mercedes front brake calipers. And Jaguar driveshafts. And the design is equipped with a laser-welded swivel joint offering up to 30 degrees of flex.

Nick Pinchuk: The design's equipped with a laser-welded swivel joint offering up to 30 degrees of flex, enabling a power tool to operate quite effectively in confined spaces by offsetting its position and still getting to the fastener. All this makes the repair possible without time-consuming disassembly. The set was just introduced, it's clear the techs are big fans once again. That's the Snap-on Tools Group. Growing against the winds of uncertainty. Pivoting to faster payback items, observing more, and developing solutions that solve the complex. Now let's turn to RS&I. Sales in the quarter were $480.3 million, up 2.5%, including $4.7 million from the Diesel Laptops acquisition and $3.8 million in favorable foreign currency translation. Organic sales were up slightly over last year. Momentum in our diagnostic and under-care equipment for independent garages was attenuated by lower volumes in the OEM dealership segment.

Speaker #3: Enabling a power tool to operate quite effectively and combine spaces by offsetting its position. And still getting to the fastener. That makes the repair all this makes the repair possible without time-consuming disassembly.

Speaker #3: The set was just introduced. And it's clear the techs are big fans. Once again. So that's the tools group. Growing against the winds of uncertainty.

Speaker #3: Pivoting to faster payback items. Observing work and developing solutions that solve the complex. Now let's turn to RS&I. Sales in a quarter were 480.3 million.

Speaker #3: Up 2.5% including 4.7 million. From the diesel laptops acquisition. And 3.8 million in favorable foreign currency translation. Organic sales were up slightly. Over last year.

Speaker #3: Momentum in our diagnostics and undercare equipment for independent garages was attenuated by lower volumes in the OEM dealership segment. Operating earnings in the quarter were 115.1 million compared to 119.8 last year.

Nick Pinchuk: Operating earnings in the quarter were $115.1 million compared to $119.8 million last year. The group's operating income, OI margin, was 24% versus the 25.6% last year, down, but still strong. What that decrease represents the effect of higher sales in lower margin equipment products and ongoing investments in our proprietary database, advancing with our large language models, an effort that we know will all pay dividends going forward. The independent shops were the bright spot, and a big reason was the recent launch of our Apollo handheld diagnostic unit. It's a new entry point for the techs wanting the power of Intelligent Diagnostics at a moderate cost. The phrase entry level doesn't do it justice. The Apollo has a number of great features.

Speaker #3: The group's operating income OI margin was 24% versus a 25.6 last year. Down. But still strong. And, you know, what that decrease represents the effect of higher sales in lower margin equipment products and ongoing investments in our proprietary database advancing with our large language models.

Speaker #3: An effort that we know will all pay dividends going forward. The independent shops were the bright spot. And a big reason was the recent launch of our Apollo handheld diagnostic unit.

Speaker #3: It's a new entry point for those for the techs wanting the power of intelligent diagnostics at a moderate cost. But, you know, the phrase entry level doesn't do doesn't do it justice.

Speaker #3: The Apollo has features. That has a number of great features. The full power of our industry-leading proprietary information. Expansive manufacturer and model coverage. Fast-track intelligent diagnostics for guided workflow.

Nick Pinchuk: The full power of our industry-leading proprietary information, expansive manufacturer and model coverage, Fast-Track Intelligent Diagnostics for guided workflow, and our SureTrack database, powered by 660 billion vehicle events and 3.4 billion repair records. Apollo. It's whip-smart, it's also easy, with improved display visibility and extended battery life and wireless connection to the vehicle, so techs can roam freely in the bay without being tethered in the driver's compartment. The increased storage makes it clearly faster. The new Apollo is a winning combination, smarter, easier, and faster. Sales out of the van were strong, the momentum, it's an important thing. After the launch, the momentum remains robust. Well, that's RS&I. Powerful hardware and software, differentiated by proprietary data with more speed and more accuracy than ever before. Wielding new products to conquer the complex repairs of today's cars. That's Snap-on Q2.

Speaker #3: And our sure-track database powered by 660 billion vehicle events and 3.4 billion repair records. Apollo, you know, it's whip smart. But it's also easy with improved display visibility and extended battery life and wireless connections to the vehicle so techs can roam freely in the bay without being tethered in the driver's compartment.

Speaker #3: And the increased storage makes it clearly faster. So the new Apollo is a winning combination. Smarter, easier, and faster. Sales on the van were strong.

Speaker #3: And a momentum is an important thing. After the launch, the momentum remains robust. Well, that's RS&I. Powerful hardware and software. Differentiated by proprietary data with more speed and more accuracy than ever before.

Speaker #3: Wielding new products to conquer the complex repairs of today's cars. So let's snap on second quarter. Overall sales 1 billion 235.1 million. And all-time record for the second quarter.

Nick Pinchuk: Overall sales, $1,235.1 million, an all-time record for Q2. Organic sales up 3%. Gross margin 51.4%, up 90 basis points. Powerful. The Commercial & Industrial Group, organic sales up 11%, gross margin up 260 basis points, and the operating margin up 320 basis points. Up, up. Gangbusters. It's a great quarter at Commercial & Industrial. The Snap-on Tools Group, organic sales up 3%. The pivot working against the uncertainty. Gross margin is strong. RS&I, organic sales up slightly, but the as-reported numbers setting a new record for overall sales in Q2, profits down, but still quite strong. In the overall corporation, EPS of $4.96, up $0.24 versus last year.

Speaker #3: Organic sales up 3%. Gross margin 51.4%. Up 90 basis points. Powerful. The C&I group. Organic sales up 11%. Gross margin up about 260 basis points.

Speaker #3: And the operating margin up 320 up, up. Gangbusters. It's a great quarter, C&I. The tools group. Organic sales up 3%. The pivot working against the uncertainty.

Speaker #3: Gross margin strong. RS&I. Organic sales up slightly. But as reported but the as reported numbers setting a new record were overall sales in the second quarter profits down but still quite strong.

Speaker #3: And the overall corporation EPS of 4,096 cents up 24 cents versus last year. So snap-on was rolling down our runways for growth. Enhancing the van channel to pivot to work.

Nick Pinchuk: Snap-on was rolling down our runways for growth, enhancing the van channel, the pivot's working, expanding repair shop owners and managers, strengthening our proprietary advantages, and extending to critical industries, taking Snap-on out of the garage with emphasis and profitability. It was another encouraging quarter. Now I'll turn the call over to Aldo. Aldo?

Speaker #3: Expanding repair shop owners and managers. Strengthening our proprietary advantages. And extending to critical industries taking snap-on out of the garage with emphasis and profitability.

Speaker #3: It was another encouraging quarter. Now I'll turn the call over to Aldo. Aldo?

Aldo Pagliari: Thanks, Nick. Our consolidated operating results for Q2 are summarized on slide six. Net sales of $1,235.1 million in the quarter represented an increase of 4.7% from 2025 levels, reflecting a 3% organic gain, $11.5 million of sales from the acquisitions of Hi-Force hydraulic tools and Diesel Laptops that occurred during that period, and $8.7 million of favorable foreign currency translation. Sales in our Commercial & Industrial sector, or the Commercial & Industrial Group, were up double digits versus last year, with progress made across North America, Asia, and in Europe. In our automotive repair market, sales gains were achieved through our franchise van channel in the US as well as internationally. Consolidated gross margin of 51.4% compared to 50.5% in Q2 last year. Improvement of 90 basis points primarily reflected the benefit of increased volume and savings from the company's RCI initiatives.

Speaker #1: Thanks, Nick. Our consolidated operating results for the second quarter are summarized on slide 6. Net sales of 1 billion 235.1 million dollars in the quarter represented an increase of 4.7% from 2025 levels.

Speaker #1: Reflecting a 3% organic gain. 11.5 million dollars of sales from the acquisitions of high-force hydraulic tools and diesel laptops that occurred during that period.

Speaker #1: And 8.7 million dollars of favorable foreign currency translation. Sales in our commercial and industrial sector where the C&I group were up double digits versus last year.

Speaker #1: With progress made across North America, Asia, and in Europe. In our automotive repair market, sales gains were achieved through our franchise van channel in the United States as well as internationally.

Speaker #1: Consolidated gross margin of 51.4% compared to 50.5% in the second quarter last year. Improvement of 90 basis points primarily reflected the benefit of increased volume and savings from the company's RCI initiatives.

Speaker #1: Operating expenses is a percentage of net sales of 29.6% rose from 28.5% in 2025. Primarily due to increased personnel and other costs as we continue to invest in support of our brand and our business opportunities.

Aldo Pagliari: Operating expenses as a percentage of net sales of 29.6% rose from 28.5% in 2025, primarily due to increased personnel and other costs as we continue to invest in support of our brand and our business opportunities. Operating earnings before financial services of $268.9 million in the quarter compared to $259.1 million last year. As a percentage of net sales, operating margin before financial services of 21.8% compared to 22% reported in 2025. Financial services revenue of $99.7 million in Q2 compared to $101.7 million last year, while operating earnings of $67.5 million compared to $68.2 million in 2025. Consolidated operating earnings of $336.4 million compared to $327.3 million last year. As a percentage of revenues, the operating earnings margin 25.2% compared to 25.5% in 2025. Our Q2 effective income tax rate was 21.9% in 2026 and 22.5% last year.

Speaker #1: Operating earnings before financial services of 268.9 million dollars in the quarter compared to 259.1 million dollars last year. As a percentage of net sales, operating margin before financial services of 21.8% compared to 22% reported in 2025.

Speaker #1: Financial services revenue of 99.7 million dollars in the second quarter compared to 101.7 million dollars last year while operating earnings of 67.5 million compared to 68.2 million in 2025.

Speaker #1: Consolidated operating earnings of 336.4 million dollars compared to 327.3 million dollars last year as a percentage of revenues. The operating earnings margin of 25.2% compared to 25.5% in 2025.

Speaker #1: Our second quarter effective income tax rate was 21.9% in 2026 and 22.5% last year. Net earnings of 260.6 million dollars or $4.96 per diluted share compared to 250.3 million dollars or $4.72 per diluted share in 2025 reflecting a 5.1% increase in earnings per share.

Aldo Pagliari: Net earnings of $260.6 million or $4.96 per diluted share compared to $250.3 million or $4.72 per diluted share in 2025, reflecting a 5.1% increase in earnings per share. Let's turn to our segment results for the quarter. Starting with the C&I Group on slide seven, sales of $395.8 million rose $48 million compared to 2025 levels, reflecting an 11% organic gain, $6.8 million of acquisition-related sales, and $2.5 million of favorable foreign currency translation. The organic volume improvement includes advancements in our Asia-Pacific and European-based Hand Tools businesses, which have better tailored their cross-border supply chain activities in response to the current trade environment. The group also benefited from double-digit gains in our specialty torque and power tools operations.

Speaker #1: Now let's turn to our second results for the quarter. Starting with the C&I group on slide 7. Sales of 395.8 million dollars rose 48 million dollars compared to 2025 levels reflecting an 11% organic gain.

Speaker #1: 6.8 million dollars of acquisition-related sales. And 2.5 million dollars of favorable foreign currency translation. The organic volume improvement includes advancements in our Asia Pacific and European-based handheld businesses which have better tailored their cross-border supply chain activities in response to the current trade environment.

Speaker #1: The group also benefited from double-digit gains in our specialty torque and power tools operations. Sales to customers in critical industries rose mid-single digits in the period led by robust activity in international and US aviation and including gains in heavy-duty fleets and technical education.

Aldo Pagliari: Sales to customers in critical industries rose mid-single digits in the period, led by robust activity in international and US aviation, and including gains in heavy-duty fleets and technical education. Shipments serving military applications remain attenuated both in the quarter and year-to-date. Gross margin improved 260 basis points to 42.6% in the quarter from 40% last year, mostly due to the increased sales and savings from the segment's RCI initiatives. Operating expenses as a percentage of sales of 25.8% in the quarter improved 70 basis points from last year, primarily reflecting the higher sales volumes. Operating earnings for the C&I Group of $66.5 million compared to $46.9 million in 2025, and the operating margin of 16.8% improved 330 basis points from last year. Turning to slide eight.

Speaker #1: Shipments serving military applications remain attenuated both in the quarter and year-to-date basis. Gross margin improved 260 basis points to 42.6% in the quarter from 40% last year.

Speaker #1: Mostly due to the increased sales and savings from the segments RCI initiatives. Operating expenses as a percentage of sales of 25.8% in the quarter improved 70 basis points from last year primarily reflecting the higher sales volumes.

Speaker #1: Operating earnings for the C&I group of 66.5 million dollars compared to 46.9 million dollars in 2025. And the operating margin of 16.8% improved 330 basis points from last year.

Speaker #1: Turning down to slide 8. Sales in the snap-on tools group of 508.8 million dollars compared to 491 million dollars last year reflecting a 3% organic sales gain and 2.9 million dollars of favorable foreign currency translation.

Aldo Pagliari: Sales in the Snap-on Tools Group of $508.8 million compared to $491 million last year, reflecting a 3% organic sales gain and $2.9 million of favorable foreign currency translation. The organic increase was due to low single-digit gains both in the United States and in the segment's international operations. Activity in the quarter included higher sales of featured new items, including those in the power tools, air conditioning service, and diagnostics product lines. As a reminder, the Tools Group serves as a distributor for these products, which are made by our C&I and RS&I groups. Gross margin of 48% in the quarter compared to 48.3% last year. The 30 basis point decline primarily reflected a year-over-year shift in product mix, partially offset by savings from the segment's RCI initiatives. Operating expenses as a percentage of sales of 25.4% compared to 24.5% in 2025.

Speaker #1: The organic increase was due to low single-digit gains both in the United States and in the segments international operations. Activity in the quarter included higher sales of featured new items including those in the power tools air conditioning service and diagnostics product lines.

Speaker #1: As a reminder, the tools group serves as a distributor for these products which are made by our C&I and RS&I groups. Gross margin of 48% in the quarter compared to 48.3% last year.

Speaker #1: The 30 basis point decline primarily reflected a year-over-year shift in product mix partially offset by savings from the segments RCI initiatives. Operating expenses as a percentage of sales of 25.4% compared to 24.5% in 2025.

Speaker #1: The increase was due to higher personnel rate and other costs. Operating earnings for the snap-on tools group of 115.1 million dollars compared to 116.7 million in 2025.

Aldo Pagliari: The increase was due to higher personnel, freight, and other costs. Operating earnings for the Snap-on Tools Group of $115.1 million compared to $116.7 million in 2025. The operating margin of 22.6% compared to 23.8% last year. Turning to the RS&I Group shown on slide nine. Sales of $480.3 million compared to $468.6 million a year ago, reflecting a $3.2 million organic gain, $4.7 million of acquisition-related sales, and $3.8 million of favorable foreign currency translation. On an organic basis, low single-digit increases in undercar equipment and in sales of diagnostics and repair information products to independent repair shop owners and managers were mostly offset by decreased activity with OEM dealerships. Gross margin for the RS&I Group of 46.3% decreased 50 basis points from last year, primarily reflecting higher sales of lower gross margin products. Operating expenses as a percentage of sales of 22.3% compared to 21.2% in 2025.

Speaker #1: The operating margin of 22.6% compared to 23.8% last year. Turning to the RS&I group shown on slide 9. Sales of 480.3 million dollars compared to 468.6 million dollars a year ago reflecting a 3.2 million dollar organic gain 4.7 million dollars of acquisition-related sales and 3.8 million dollars of favorable foreign currency translation.

Speaker #1: On an organic basis, low single-digit increases in undercar equipment and in sales of diagnostics and repair information products the independent repair shop owners and managers were mostly offset by decreased activity with OEM dealerships.

Speaker #1: Gross margin for the RS&I group of 46.3% decreased 50 basis points from last year primarily reflecting higher sales and lower gross margin products. Operating expenses as a percentage of sales of 22.3% compared to 21.2% in 2025.

Speaker #1: The increase was due to higher personnel and other costs expanded technology investments as well as 20 basis points from the recently completed acquisition of diesel laptops.

Aldo Pagliari: The increase was due to higher personnel and other costs, expanded technology investments, as well as 20 basis points from the recently completed acquisition of Diesel Laptops. Operating earnings of $115.1 million compared to $119.8 million last year. The operating margin of 24% compared to 25.6% reported in 2025. Turning to slide 10. Revenue from financial services of $99.7 million decreased $2 million from last year, primarily due to lower interest income resulting from a year-over-year decrease in the size of the average finance receivable portfolio in the period. Financial service expenses of $32.2 million decreased from $33.5 million in 2025, mostly due to $1 million of lower provisions for credit losses. As a result, financial services operating earnings were $67.5 million compared to $68.2 million last year.

Speaker #1: Operating earnings of 115.1 million dollars compared to 119.8 million dollars last year. The operating margin of 24% compared to 25.6% reported in 2025. Now turning to slide 10.

Speaker #1: Revenue from financial services of 99.7 million dollars decreased 2 million dollars from last year primarily due to lower interest income resulting from a year-over-year decrease in the size of the average financial receivable portfolio in the period.

Speaker #1: Financial service expenses of 32.2 million dollars decreased from 33.5 million in 2025 mostly due to 1 million dollars of lower provisions for credit losses.

Speaker #1: As a result, financial services operating earnings of 67.5 million dollars compared to 68.2 million dollars last year. In the second quarter, the respective average yields on financial receivables were 17.6% and 17.5% in 2026 and 2025 while the average yields on contract receivables were 9% in 2026 and 9.1% in 2025.

Aldo Pagliari: In Q2, the respective average yields on finance receivables were 17.6% and 17.5% in 2026 and 2025, while the average yields on contract receivables were 9% in 2026 and 9.1% in 2025. Total loan originations of $281 million in Q2 represented a decrease of $12 million or 4.1% from 2025 levels. Originations of extended credit loans were $237.6 million in the period, reflecting a decrease of $5.9 million or 2.4% from last year. Moving to slide 11. Our quarter-end balance sheet includes approximately $2.5 billion of gross financing receivables, with $2.1 billion from our US operation. For extended credit or finance receivables, the US 60-day-plus delinquency rate of 1.7% is down 10 basis points from Q2 of 2025. Additionally, the rate is down 20 basis points from last quarter.

Speaker #1: Total loan originations of 281 million dollars in the second quarter represented a decrease of 12 million dollars or 4.1% from 2025 levels. Originations of extended credit loans were 237.6 million dollars in the period reflecting a decrease of 5.9 million dollars or 2.4% from last year.

Speaker #1: Moving to slide 11. Our quarter-end balance sheet includes approximately 2.5 billion dollars of gross financing receivables with 2.1 billion from our US operation. For extended credit or finance receivables, the US 60-day plus deliquacy rate of 1.7% is down 10 basis points from the second quarter of 2025.

Speaker #1: Additionally, the rate is down 20 basis points from last quarter. Trailing 12-month net losses for the overall extended credit portfolio of 71.9 million dollars represented 3.7% of outstandings at quarter-end down sequentially from 3.75% in the first quarter of this year.

Aldo Pagliari: Trailing 12-month net losses for the overall extended credit portfolio of $71.9 million represented 3.7% of outstandings at quarter end, down sequentially from 3.75% in Q1 of this year. We believe that these portfolio performance metrics are encouraging considering the current environment. Turning to slide 12. Cash provided by operating activities of $271.5 million in the quarter compared to $237.2 million last year. Net cash used by investing activities of $195.1 million mostly reflected business acquisitions during the quarter of $154 million net of cash acquired, consisting of $99.1 million for Diesel Laptops and $54.9 million for Hi-Force. Additionally, the company incurred $23.1 million in capital expenditures. Net cash used by financing activities of $185.8 million included cash dividends of $126.4 million and the repurchase of 241,000 shares of common stock for $91.4 million under our existing share repurchase programs.

Speaker #1: We believe that these portfolio performance metrics are encouraging considering the current environment. Now turning to slide 12. Cash provided by operating activities of 271.5 million dollars in the quarter compared to 237.2 million dollars last year.

Speaker #1: Net cash used by investing activities of 195.1 million dollars mostly reflected business acquisitions during the quarter of 154 million dollars net of cash acquired.

Speaker #1: Consisting of 99.1 million dollars for diesel laptops and 54.9 million dollars for hypers. Additionally, the company incurred 23.1 million dollars in capital expenditures. Net cash used by financing activities of 185.8 million included cash dividends of 126.4 million dollars and the repurchase of 241,000 shares of common stock for 91.4 million dollars under our existing share repurchase programs.

Speaker #1: As of quarter-end, we had remaining availability to repurchase up to an additional 185.5 million dollars of common stock under existing authorizations. Turning to slide 13.

Aldo Pagliari: As of quarter end, we had remaining availability to repurchase up to an additional $485.5 million of common stock under existing authorizations. Turning to slide 13. Trade and other accounts receivable of $942.2 million represented an increase of $60.8 million from 2025 year-end levels, mostly due to higher sales and $12.2 million from acquisitions. Days sales outstanding were 70 days at the end of Q2 and 67 days at 2025 year-end. Inventories, including $17.6 million from acquisitions, increased by $20.1 million from 2025 year-end. On a trailing 12-month basis, inventory turns of 2.4 were the same in both periods. Our quarter-end cash position of $1,644.7 million compared to $1,624.5 million at the end of 2025. That concludes my remarks on our Q2 performance. I'll now review a few outlook items for the remainder of 2026.

Speaker #1: Trade and other accounts receivable of 942.2 million dollars represented an increase of 60.8 million dollars of 2025 year-end levels mostly due to higher sales and 12.2 million dollars from acquisitions.

Speaker #1: Today's sales outstanding were 70 days at the end of the second quarter and 67 days at 2025 year-end. Inventories including 17.6 million dollars from acquisitions increased by 20.1 million dollars from 2025 year-end.

Speaker #1: On a trailing 12-month basis, inventory turns of 2.4 were the same in both periods. Our quarter-end cash position of 1 billion 644.7 million dollars compared to 1 billion 624.5 million dollars at the end of 2025.

Speaker #1: That concludes my remarks on our second quarter performance. I'll now review a few outlook items for the remainder of 2026 with respect to corporate cost.

Aldo Pagliari: With respect to corporate cost, we currently believe that expenses will approximate $28 million for each of the remaining two quarters of 2026. As a reminder, in Q3 2025, our diluted earnings per share of $5.02 included a $0.31 non-recurring one-time benefit from an RS&I Group legal settlement. We expect that capital expenditures for the year will be approximately $100 million, and we currently anticipate that our full year 2026 effective income tax rate will approximate 22%. I'll now turn the call back to Nick for his closing thoughts. Nick?

Speaker #1: We currently believe that expenses will approximate 28 million dollars for each of the remaining two quarters of 2026. As a reminder, in the third quarter of 2025, our diluted earnings per share of $5.02 included a 31-cent non-recurring one-time benefit from an RS&I group legal settlement.

Speaker #1: We expect that capital expenditures for the year will be approximately 100 million dollars and we currently anticipate that our full year 2026 effective income tax rate will approximate 22%.

Speaker #1: I'll now turn the call back to Nick for his closing thoughts. Nick?

Speaker #2: Thanks, Aldo. Well, that's the second quarter. Continuing momentum in the midst of extreme turbulence. To use an ancient reference, now suddenly contemporary, it feels like we're moving between the silla of international conflicts and the Caribbean of supply chain revisions.

Nick Pinchuk: Thanks, Aldo. Well, that's Q2. Continuing momentum in the midst of extreme turbulence. To use an ancient reference, now suddenly contemporary, it feels like we're moving between the Scylla of international conflicts and the Charybdis of supply chain revisions. Although it's challenging, we are making headway, and so it is. C&I coming into its own. Sales up organically 11%. Gross margin is 42.6%, up 260 basis points. OI 16.8%, an all-time high. C&I on a trend demonstrating that opportunities and rolling the Snap-on brand out of the garage are substantial, as we always said they were. Tool Group, sales up 3% organically. The momentum continues, and the green shoots grow. RS&I sales up 2.5% as reported, up 0.7% organically. Robust with independence, impacted by the OEM dole grows. OI margin's 24%, down but still strong, all while managing the turbulence and funding increased investments.

Speaker #2: And although it's challenging, we are making headway. And so it is. CNI, coming into its own, fails up organically 11% gross margins, 42.6%, up 260 basis points, OI 16.8%, and all-time high.

Speaker #2: CNI on a trend demonstrating that opportunities and rolling the snap-on brand out of the garage are substantial as we always said they were. Full scoop.

Speaker #2: Sales up 3% organically. The movement the momentum continues and the green shoots grow. And RS&I sales up 2.5% as reported. Up 0.7% organically. Robust with independence.

Speaker #2: Impacted by the OEM doldrums. OI margins 24% down but still strong. All while managing the turbulence and funding increased investments. And it all came together for the corporation.

Nick Pinchuk: It all came together for the corporation. Sales up 4.7% as reported, 3% organically. Gross margin 51.4%, and OI margin 21.8%. Both robust. The results taken individually or collectively are marked by momentum, strength, and continuing green shoots. It was an encouraging quarter, and we believe it speaks volumes about the possibilities of our path forward. These are exceedingly turbulent and interesting times, yet our markets remained quite resilient. Both vehicle repair and critical industries, anchored in the essential nature of the task, activities that are needed, come what may. The quarter showed we can participate fully in that resilience, wielding our decisive advantages in product, brand, and in people. Product, we really do make critical tasks easier. You heard that echoed in the great new offerings we just discussed. Brand, Snap-on really does define the professional like no other brand.

Speaker #2: Sales up 4.7% as reported. 3% organically. Gross margins 51.4 a 4% and OI margin 21.8%. Both robust. The results taken individually or collectively are marked by momentum, strength, and continuing green shoots.

Speaker #2: It was an encouraging quarter. And we believe it speaks volumes about the possibilities of our path. These are exceedingly turbulent and interesting times. Yet our markets remained quite resilient.

Speaker #2: Resilient. Both vehicle repair and critical industries. Anchored in the essential nature of the task activities that are needed, come what may. And the quarter showed we can participate fully in that resilience.

Speaker #2: Wielding our decisive advantages in product, brand, and in people. Product. We really do make critical tasks easier. You heard that echoed in the great in the great new offerings we just discussed.

Speaker #2: Brand. Snap-on really does define the professional. Like no other brand. You could hear it in the voices of the techs we visited. And people.

Nick Pinchuk: You could hear it in the voices of the techs we visited. People, the Snap-on team really is uniquely capable, deeply experienced, and relentlessly committed to achieve. You can see it in the engagement day after day. With the opportunities of our resilient markets and the power of our advantage, we are confident. Confident in our belief that we will extend our progress, maintain it even in the turbulence, and drive a positive trajectory on through the year and well beyond. Before I turn the call over to the operator, I'll speak directly to our franchisees and associates. You are those who really do make a difference. Snap-on's storied past, exciting now, and promising future is rooted in your commitment. For the enthusiasm you bring to our enterprise every day, you have my admiration. For the success you've achieved this encouraging quarter, you have my congratulations.

Speaker #2: The snap-on team really is uniquely capable, deeply experienced, and relentlessly committed to achieve you can see in the engagement day after day. And with the opportunities of our resilient markets and the power of our advantage, we are confident.

Speaker #2: Confident in our belief that we will extend our progress, maintain it even in the turbulence, and drive a positive trajectory on through the year and well beyond.

Speaker #2: Now, before I turn the call over to the operator, I'll speak directly to our franchisees and associates. You are those who really do make a difference.

Speaker #2: Snap-on story past exciting now and promising future is rooted in your commitment. For the enthusiasm you bring to our enterprise every day, you have my admiration.

Speaker #2: For the success you've achieved, this encouraging quarter, you have my congratulations. And for the unfailing dedication to our you hold to our team and the firm conviction you have in our days and decades ahead, for our enterprise, you have my thanks.

Nick Pinchuk: For the unfailing dedication you hold to our team and the firm conviction you have in our days and decades ahead for our enterprise, you have my thanks. Now I'll turn the call over to the operator. Operator?

Speaker #2: Now I'll turn the call over to the operator. Operator?

Speaker #3: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchstone phone.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily for the first question. Our first question today will come from David MacGregor with Longbow Research. Please go ahead.

Speaker #3: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. And at this time, we'll pause momentarily for the first question.

Speaker #3: And our first question today will come from David McGregor with Longbow Research. Please go ahead.

Speaker #4: Yes, good morning, everyone. Good morning, Nick.

David MacGregor: Yes. Good morning, everyone. Good morning, Nick.

Nick Pinchuk: Morning.

Speaker #2: Morning.

Speaker #4: I wanted to start off good morning. I wanted to start off by just asking about the gross profit upside in CNI, 220 basis points.

David MacGregor: Good morning. I want to start off by just asking about the gross profit upside in C&I, 220 basis points. How much of that do you think was mix-driven versus maybe other factors?

Speaker #4: How much of that do you think was mixed-driven versus maybe other factors?

Speaker #2: So I have 60 basis points, by the way. But anyway. Why equivalent? Isn't it 260?

Nick Pinchuk: 260 basis points, by the way. Anyway.

David MacGregor: 220.

Nick Pinchuk: Why quibble over this?

David MacGregor: 260.

Nick Pinchuk: Isn't it 260?

Speaker #4: It is 260. My mistake.

David MacGregor: It is 260.

Nick Pinchuk: You're right. My mistake. I think I know my numbers. Anyway, yeah, 260. Not so much. I mean, the thing is the highest profitability business, which is the critical industries industrial business, was the business that grew mid-single digits. It grew below the average, that's far and away the most profitable. What happened then, you had movements upwards in a lot of those businesses because a couple of them brought out great new product, particularly power tools and torque. Torque's day has come, so they're making hay while the sun shines here. Then you had recovery in Asia Pacific and SNA Europe, where you got good absorption in that situation. I think that was the factors.

Speaker #2: I think I know my numbers. But anyway, the yeah, 260. You know, not so much. Not so much. I mean, the thing is, I the tools the highest profitability business, which is the critical industries industrial business, was the business that grew mid-single digits.

Speaker #2: So grew below the average. And so that's far and away the most profitable. What happened in you had movements upwards in a lot of those businesses because they brought a couple of them brought out great new product, particularly power tools and torque.

Speaker #2: You know, torque's day has come. So they're making a hay while the sun shines here. And then you had recovery in Asia-Pacific and SNA Europe where you got good absorption in that situation.

Speaker #2: So I think that was the factors.

Speaker #4: Okay. Seems like there was probably a pretty good pull through to the snap-on tools segment on some of these bigger ticket items like diagnostics and maybe specialty torque.

David MacGregor: Okay. Seems like there was probably a pretty good pull-through to the Snap-on Tools Group on some of these bigger ticket items like diagnostics and maybe specialty torque. The originations were down 4%. Do you think the franchisees are just restocking in these items? Which would be a little surprising ahead of the SFC, but what's your perspective?

Speaker #4: But the originations were down 4%. Do you think the franchisees are just restocking in these items, which would be a little surprising ahead of the SFC, but what's your perception?

Nick Pinchuk: No, I don't know. Look, I think if you step back and you look at what happened, there was pull-through. I think you have to parse between torque and diagnostics because torque isn't that big in origination products. You kind of have to take that. I would diminish that in the mix. You're talking about diagnostics versus tool storage. Diagnostics was up nicely, but tool storage was down, and tool storage is a bigger piece of the pie. When it's down, there's more volume flowing through there, so that's what happens in origination. Now, originations, what were they down? A couple, three points, something like that. It's small. It's low single digits. It was slightly less originations on year-over-year than last time, but not so big a change. I don't think we're surprised by it too much. I'm not sure.

Speaker #2: No, I don't know. You know, look, I think this if you step back and you look at the what happened, there was pull through.

Speaker #2: I think you have to parse between torque and diagnostics. Because torque isn't that isn't that big an you know, an origination. Product. So you kind of have to take that I would diminish that in the mix.

Speaker #2: So you're talking about diagnostics versus tool storage. Diagnostics was up nicely. But tool storage was down. And tool storage is a bigger piece of the pie.

Speaker #2: So when it's down, there's more volume flowing through there. So that's what happens in origination. Now, originations you know, what were they down? A couple three points, something like that.

Speaker #2: You know, small low single digits. So it was slightly more less originations on year over year than last time, but not so big a change.

Speaker #2: I don't think we're surprised by it too much. I'm not sure. And to answer your question directly, I'm not sure you can read too much into that.

Nick Pinchuk: To answer your question directly, I'm not sure you can read too much into that in terms of stocking.

Speaker #2: In terms of stocking.

Speaker #4: Okay. And then I think we talked in the past about you increasing your insourcing since the whole tariff sort of situation developed. Can you talk about the extent to which that may have helped you on the margin side this quarter?

David MacGregor: Okay. I think we've talked in the past about you increasing your insourcing since the whole tariff sort of situation developed. Can you talk about the extent to which that may have helped you on the margin side this quarter?

Speaker #2: Well, yeah, I can't give you any direct numbers, but one of the things I didn't well, you heard the 14.4-vote ratchet and you know, that we launched that.

Nick Pinchuk: Well, yeah, I can't give you any direct numbers, but one of the things I did is, well, you heard the 14.4-volt ratchet and that we launched that. Our whole 14.4-volt line had been made in Kunshan and was eating, for a period of time, a lot of margins. A lot of tariffs. We don't have that many tariffs. We have some of them. We brought that whole line home, and we were able to start sourcing again with more volume in Murphy, which is the power tools plant, and that started to help us. Same kind of things happening in torque. We're doing that in torque. It's really up and down. Diagnostics was ahead of the curve on that.

Speaker #2: And our whole 14.4-vote line had been made in Quinshon and was eating for a period of time. A lot of margins. A lot of tariffs.

Speaker #2: So you know, we don't have that many tariffs. We have some of them. And so we brought that whole line home. And we were able to start sourcing again with more volume in Murphy, which is the power tools plant.

Speaker #2: And that started to help us. Same kind of things happening in torque, we're doing that in torque. So it's really up and down. Diagnostics, was ahead of the curve on that.

Speaker #2: They were already bringing stuff home. So they had the thing established. So they didn't get much out of this. In terms of even though they did a great job of avoiding any kind of tariff entanglements, so I think you saw good news in both power tools and torque.

Nick Pinchuk: They were already bringing stuff home, they had the thing established, they didn't get much out of this in terms of even though they did a great job of avoiding any kind of tariff entanglements. I think you saw good news in both power tools and torque. The numbers show it. They're up. Their profitability's up considerable number of basis points.

Speaker #2: And the numbers show it. They're up their profitability is up considerable number of basis points.

Speaker #4: Okay. Last question for me is just on, you know, gross margins in RS&I and in snap-on tools. We're down year over year. I realize there's some mixed discussion there as well.

David MacGregor: Okay. Last question for me is just on gross margins in RS&I and in Snap-on tools were down year-over-year, and I realize there's some mix discussion there as well. I'm just wondering, Aldo had characterized the gross margins as having benefited from RCI. I'm just wondering at what point you need to lean more aggressively into the market on pricing in order to protect these margins.

Speaker #4: I'm just wondering, you know, Aldo had characterized the gross margins as having benefit from RCI. I'm just wondering at what point you need to lean more aggressively into the market on pricing.

Speaker #4: In order to protect these margins.

Nick Pinchuk: Yeah, I don't know. Look, yeah, I could do that. I'm not so anxious to do that. The gross margin, look, Dave, the gross margin in Tools Group is down 30 basis points.

Speaker #2: Yeah, I don't know. Look, yeah, I could do that. I'm not so anxious to do that. The gross margin, look. Look, Dave, the gross margin in tools group is down 30 basis points.

Speaker #2: So 90 of those basis points was an OE margin deterioration. You know, how much they were down in the quarter, you know, the 22.6% was down 120 basis points.

Nick Pinchuk: 90 of those basis points was an OE margin deterioration, about how much they were down in the quarter. The 22.6% was down 120 basis points. We didn't think gross margins were that much out of whack in the Tools Group. Now, you always have more pricing you want to do, but I don't like that. I like to beat it with RCI and sourcing changes, especially in this environment. Plus, actually, I like to hammer it with good new tools. The big thing about the margin deterioration of the Tools Group was it was principally tieable to the fact that all the big hits this quarter were made by somebody else.

Speaker #2: So we didn't think gross margins were that much out of whack in the tools group. Now, you always have more pricing you want to do.

Speaker #2: But I don't like that. I like to beat it I like to beat it with RCI and sourcing changes, especially in this environment. Plus, actually, I like that.

Speaker #2: I like the hammer with good new tools. The big thing about the margin deterioration of tools group was it was principally tieable to the fact that all the big hits this quarter were made by somebody else.

David MacGregor: Yep.

Speaker #4: Yeah.

Speaker #2: So they had a share of the margins. That's really the cadence of the tools group. Actually, I'll tell you, we haven't seen a quarter quite this dominant for the other products.

Nick Pinchuk: They had to share the margins. That's really the cadence of the Tools Group. Actually, I'll tell you, we haven't seen a quarter quite this dominant for the other products. They all came out with hits that they sold. I didn't mention Polartec, the air conditioning, but that's made by the RS&I business, and that was shared through the tools. That's really it. Those margins aren't much of a concern for us.

Speaker #2: They all came out with hits. They sold I didn't mention Polartech, the air conditioning. But that's made by the RS&I business. And that was shared.

Speaker #2: So that's really it. Tools group margins aren't much of a aren't much of a concern for us.

David MacGregor: Got it. Thanks a lot, Nick. Good luck.

Speaker #4: Got it. Thanks a lot, Nick. Good luck.

Nick Pinchuk: Sure.

Speaker #2: Sure.

Speaker #1: In our next question, we'll come from Christopher Glenn. Oppenheimer, please go ahead.

Operator: Our next question will come from Christopher Glenn with Oppenheimer. Please go ahead.

Christopher Glenn: Yeah, thanks. Good morning, everyone. Just wanted to-

Christopher Glynn: Yeah, thanks. Good morning, everyone. Just wanted to-

Speaker #2: Yeah, thanks. Good morning, everyone. Just wanted to take a look at it's good morning. Just want to use kind of storage as a kind of a barometer for discussing the market for SOT.

Nick Pinchuk: Good morning, Chris

Christopher Glenn: Good morning. Just want to use storage as a barometer for discussing the market for SOT. Storage had a really nice quarter. Last quarter seemed to be some optimism it would hold. Maybe the Q1 was just a little bit of isolated success that sort of defied the characterization of the market as fast payback. Do I have that right, would you say?

Christopher Glynn: Good morning. Just want to use storage as a barometer for discussing the market for SOT. Storage had a really nice quarter. Last quarter seemed to be some optimism it would hold. Maybe the Q1 was just a little bit of isolated success that sort of defied the characterization of the market as fast payback. Do I have that right, would you say?

Speaker #2: So storage had a really nice quarter. Last quarter seemed to be some optimism. It was it would hold. But you know, maybe the first quarter was just a little bit of isolated success.

Speaker #2: That sort of defied the characterization of the market as fast payback. Do I have that right, would you say?

Speaker #3: Yeah, sort of. I mean, I think it's in a first quarter, we launched that special, you know, semi-Quincentennial boxes. That gave some oomph to tool storage.

Nick Pinchuk: Yeah, sort of. I think it's in the Q1 we launched that special semi-quincentennial boxes that gave some oomph to full storage.

Christopher Glenn: Definitely.

Christopher Glynn: Definitely.

Speaker #3: So I really believe you know, we only made like 1,776 of them. They were numbered. People were crawling over each other to get them.

Nick Pinchuk: Really good. We only made like 1,776 of them. They were numbered. People were crawling all over each other to get them. I think that overcame the reticence. People saw it as a once in a lifetime opportunity to get them, so they kind of overcame the reticence. You saw some of that. Look, I think this quarter, this uncertainty is about the same. I don't know. If you want to play the uncertainty game, you could have said in the Q1 things were rolling along. Maybe you saw uncertainty was a little weaker, and then you poured the oil of Iran on top of it. Maybe you saw some little bit more reinforcement of the uncertainty. Although we didn't think we saw it in our numbers. We think it's about the same.

Speaker #3: And so I think that overcame the reticence. You know, people saw it as a once-in-a-lifetime opportunity to get them. So they kind of overcame the reticence.

Speaker #3: So you saw some of that. I think look, I think this quarter I think this uncertainty is about the same. I don't know if you want to play the uncertainty game.

Speaker #3: You could have said in the first quarter, things were rolling along. Maybe you saw, you know, uncertainty was a little weaker. And then you poured the oil of Iran on top of it.

Speaker #3: So maybe you saw some a little bit more reinforcement of the uncertainty. Although we didn't think we saw it in our numbers. We think it's about the same.

Speaker #3: So the first quarter, we chalked up, Chris, to, you know, some incandescent new product that you can only get once in a lifetime.

Nick Pinchuk: The Q1 we chalked up, Chris, to some incandescent new product that you can only get once in a lifetime.

Speaker #1: Got it. Great. Semi-Quincentennial. I like that turn of phrase there.

Christopher Glenn: Got it. Great. Semi-quincentennial. I like that turn of phrase there.

Christopher Glynn: Got it. Great. Semi-quincentennial. I like that turn of phrase there.

Nick Pinchuk: Yes. You like it?

Speaker #3: Yes.

Christopher Glenn: I do, in fact. On the C&I, APAC, and Europe, really pretty encouraging there and the volume leverage, definitely notable. Appreciate your comments that that business is on a trend that's about as far as you go in terms of forecasting. Appreciate that. Anything interesting to say about market share in APAC and Europe?

Christopher Glynn: I do, in fact. On the C&I, APAC, and Europe, really pretty encouraging there and the volume leverage, definitely notable. Appreciate your comments that that business is on a trend that's about as far as you go in terms of forecasting. Appreciate that. Anything interesting to say about market share in APAC and Europe?

Speaker #2: On the.

Speaker #1: I do. In fact, on the CNI APAC in Europe, really pretty encouraging there. And you know, the volume leverage definitely notable. So appreciate your comments that that business is on a trend.

Speaker #1: That's as you know, about as far as you go in terms of forecasting. So appreciate that. Anything interesting to say about market share in APAC in Europe?

Nick Pinchuk: No. If you were in ordinary times, I think we had a number. We don't like to talk about market share. It's pretty squishy for us, actually.

Speaker #2: No, I think look, I think it's a little we certainly if you're in an ordinary times, I think we had a number we don't like to talk about market share.

Speaker #2: It's pretty squishy for us, actually.

Christopher Glenn: I'm going to ask it anyway.

Christopher Glynn: I'm going to ask it anyway.

Speaker #1: I'm asking anyway.

Speaker #2: Yeah, I know you are. Look, I think the rebound in Europe, though, for the you know, our hand tools business, our hand tool-based business, was large enough so you would start thinking you must have made some gains.

Nick Pinchuk: I know you are. Look, I think the rebound in Europe though, for our hand tools business, our hand tool-based business, was large enough so you would start thinking you must have made some gains in ordinary times. In these times, I don't know. You don't know. I think as Europe is up and down, the markets are positive one quarter, certain markets are positive one quarter, and then it shifts. I think it's very difficult to predict. What we do know is we seem to be getting more efficacious, so that's good. Same thing happened in Asia, actually.

Speaker #2: In ordinary times. And these times, I don't know. You know, you don't know. I mean, I think it's as Europe is up and down, you know, the markets are positive one quarter.

Speaker #2: Certain markets are positive one quarter, and then it shifts. So I think it's very difficult to predict. What we do know is we seem to be getting more efficacious.

Speaker #2: So that's good. Same thing happened in Asia, actually.

Speaker #1: Okay. What do you mean by more efficacious?

Christopher Glenn: Okay. What do you mean by more efficacious?

Christopher Glynn: Okay. What do you mean by more efficacious?

Speaker #2: Well, you know, I think our product lines are getting stronger. I think.

Nick Pinchuk: Well, I think our product lines are getting stronger.

Speaker #1: Okay.

Christopher Glenn: Okay

Christopher Glynn: Okay

Nick Pinchuk: Our product lines are getting stronger, I think we are having more direct customization in Europe than other places. Same in Asia. That's working pretty well. In Asia, we're selling more of what we call premium tools, which are Snap-on tools, which are pretty good. We have some of the intelligent boxes moving around there.

Speaker #2: Our we like the product lines are getting stronger. And I think we are having more direct customization. In Europe and other places. Same in Asia.

Speaker #2: So that's working pretty well. In Asia, we're selling more of what we call premium tools, which are snap-on tools, which are pretty good. And we have some of the intelligent boxes moving around there.

Speaker #1: Okay, great. Appreciate that color. Last one, RS&I margin. You know, first half run rate is a step down from what I'd call the normal 25, 26 percent range.

Christopher Glenn: Okay, great. Appreciate that color. Last one. RS&I margin. H1 run rate is a step down from what I'd call the normal 25% and 26% range, you've called out the investments in technology. Just curious if we should think of these maybe sub-normalized run rates as kind of the near-term picture continuing, or do you see some lift into the H2 that can-

Christopher Glynn: Okay, great. Appreciate that color. Last one. RS&I margin. H1 run rate is a step down from what I'd call the normal 25% and 26% range, you've called out the investments in technology. Just curious if we should think of these maybe sub-normalized run rates as kind of the near-term picture continuing, or do you see some lift into the H2 that can-

Speaker #1: And you've called out the investments in technology. So you're just curious if we should think of these maybe subnormalized run rates as kind of the near-term picture.

Speaker #1: Continuing or do you see some you know, lift into the.

Nick Pinchuk: Look, I don't know. It's hard for me to say. I think we've had three quarters of about the same sales growth in RS&I actually. For government work, you could say that. In that situation, the OE with the investments in people and our technology and so on, starts to run pretty well. To put it in perspective, RS&I was down 150 basis points, but 50 of it was in gross margin, 110 was in OE. If you want to talk about going forward improvement, I think you concentrate on the 50 basis points in gross margin, not so much the OE.

Speaker #2: Look, I don't know. It's hard for me to say. I think we've had three we've had three quarters of about the same sales growth in RS&I, actually.

Speaker #2: For government work, you could say that. And so and in that situation, the OE with the investments in people and, you know, our technology and so on starts to rain pretty well.

Speaker #2: To put it in perspective, RS&I was down 160 basis points, but 50 of it was in gross margin, 110 was in OE. So if you want to talk about going forward improvement, I think you concentrate on the 50 basis points in gross margins, not so much the OE.

Speaker #1: Thank you.

Christopher Glenn: Thank you.

Christopher Glynn: Thank you.

Speaker #2: Sure.

Nick Pinchuk: Sure.

Speaker #1: And our next question will come from Scott Stember with Roth. Please go ahead.

Operator: Our next question will come from Scott Stember with Roth. Please go ahead.

Operator: Our next question will come from Scott Stember with ROTH. Please go ahead.

Speaker #4: Good morning. Thanks for taking my questions.

Scott Stember: Good morning, thanks for taking my questions.

Speaker #2: Good morning, Scott.

Nick Pinchuk: Good morning, Scott.

Speaker #4: Good morning. Yeah. So questions on some of the green shoots that you've talked about. Last quarter heading into this quarter, seems like there's some higher ticket items related to new products that are doing well in tools.

Scott Stember: Good morning. Questions on some of the green shoots that you've talked about. Last quarter heading into this quarter, seems like there's some higher ticket items related to new products that are doing well in tools. Tool storage is still soft. Trying to get a sense of how much of the growth that we're seeing right now in tools is pivot driven, and how much of it is a potential thawing in demand for some of these higher ticket items outside of tool storage?

Speaker #4: You had tool storage that's still soft. Just net net, just trying to get a sense of how much of the growth that we're seeing right now in tools is pivot-driven.

Speaker #4: And how much of it is a potential thawing in demand for some of these higher ticket items outside of tool storage.

Nick Pinchuk: I don't know. I think that's hard to say. I do believe that the products are helping the pivot. You've got power tools and you've got certainly torque. Part of the pivot, Scott, is to enhance those product lines, and you are seeing the fruits of that enhancement play out in the market. That's the biggest piece of the increase. The other piece of the increase is you had a good quarter for Apollo, it was very appealing. Apollo traditionally, if you really have the expertise, Apollo traditionally doesn't launch as well as the other diagnostics because at a lower price point and still it's expensive. It's at an entry level for intelligent diagnostics. This one did. We're encouraged by the big launch, and that wouldn't have been the pivot.

Speaker #2: You know, I don't know. Look, I think that's hard to say. If you you know, I do believe that the products are helping the pivot.

Speaker #2: So you've got power tools, and you've got certainly torque. And so part of the pivot, Scott, is to enhance those product lines and you are seeing the fruits of that enhancement play out in the market.

Speaker #2: And that's the biggest piece of the increase. The other piece of the increase is you had a good quarter for Apollo. It was very appealing.

Speaker #2: So it had one of it had Apollo traditionally, if you really are have expertise, Apollo traditionally doesn't launch as well as the other diagnostics.

Speaker #1: Because of the lower price point and still it's expensive. You know, it's at the entry level for intelligent diagnostics. But this one did. So we're encouraged by the big launch and that wouldn't have been the pivot.

Speaker #1: That would have come out, come hell or high water, whether we're pivoting or not. But the growth in tools in power tools and torque are clearly pivot items.

Nick Pinchuk: That would've come out, come hell or high water, whether we're pivoting or not. The growth in power tools and torque are clearly pivot items. I would say you could say two-thirds of the growth or more was the pivot.

Speaker #1: And so you would have I would say you could say two-thirds of the growth or more was the pivot.

Speaker #4: Got it. And then moving over to CNI, obviously a lot of good stuff going on. But there's been you know, some noise made about your guys' opportunity within the current AI data center build-out.

Scott Stember: Got it. Moving over to C&I, obviously a lot of good stuff going on, there's been some noise made about your guys' opportunity within the current AI data center build-out. Maybe talk about that a little. Have you seen anything? If not, maybe talk about some of the green shoots that you see there.

Speaker #4: Do you want me to talk about that a little? Have you seen anything? And if not, just maybe talk about some of the green shoots that you see there?

Speaker #2: You know, Scott, I told myself I wasn't going to mention the word data center on this call because I thought it was shameless. But we did have a pretty good we did have a pretty good quarter serving some of the data centers, which we expect to drive going forward and expand.

Nick Pinchuk: Scott, I told myself I wasn't going to mention the word data center on this call because I thought it was shameless. We did have a pretty good quarter serving some of the data centers, which we expect to drive going forward and expand because the data centers, I think we'll get more business there. One business that seems to be heating up now is low precision torque. This is the Mountz product line, which we acquired it for. That's selling to data centers in quite good proportion. Part of the increase in C&I was that particular business. When I said appetite for precision, I meant big equipment in a lot of different places, aircraft and so on. I also meant data center.

Speaker #2: Because the data centers I think we'll get more business there, but one business that seems to be heating up now is low precision torque.

Speaker #2: This is the mounts product line. Which we acquired it for. And that's selling the data centers in quite big proportion. So part of the increase in CNI was that particular business.

Speaker #2: It drove when I said when I said appetite for precision, I meant big equipment and a lot of different places. You know, aircraft and so on.

Speaker #2: But I also meant data centers. But I just didn't want to want to mention it because I was to be too humiliating to say it again.

Scott Stember: I'm glad I asked.

Nick Pinchuk: I just didn't want to mention it because it'd be too humiliating to say it again.

Scott Stember: Got it. Just last, you guys called out increased personnel expense across the board, or at least in a couple of the segments. Is that more driven to growing the business or is there anything else there?

Speaker #4: Got it. And then just last you guys called out increased personnel expense across the board, or at least in a couple of the segments.

Speaker #4: Is that more driven to growing the business, or is there anything else there?

Nick Pinchuk: No. We're looking to grow the business. Sometimes when you look at these things, you say, Geez, maybe if I could put a little more energy as a point of attack in certain places, it's going to break through some of the bonds. We did some of that in the Snap-on Tools Group and in the Repair Systems & Information Group. That's why you see some of their OE up, the personnel costs there.

Speaker #2: No. We're looking to grow the business. You know, sometimes when you look at these things, you say, geez, maybe if I could put a little more energy at the point of attack in certain places, it's going to break through some of the bonds.

Speaker #2: And we did some of that in the tools group. And in the RS&I group. So that's why you see some of it are OE up, the personnel costs there.

Speaker #4: Got it. That's all I have. Thanks, guys.

Scott Stember: Got it. That's all I have. Thanks, guys.

Nick Pinchuk: All right, sure.

Speaker #2: All right. Sure.

Speaker #1: And our next question will come from Gary Prestapino with Barrington Research. Please go ahead.

Operator: Our next question will come from Gary Prestopino with Barrington Research. Please go ahead.

Speaker #5: Hi. Good morning, all.

Gary Prestopino: Hi. Good morning, all.

Nick Pinchuk: Good morning, Gary.

Speaker #2: Good morning, Gary.

Gary Prestopino: Most of my questions have been answered, I want to ask about Diesel Laptops. Was this acquisition, does this give you your first foray into the class A truck business with a database like that?

Speaker #5: Have been answered. But I want to ask about diesel laptops. Was this acquisition does this give you your first foray into the class A truck business for with the database like that?

Nick Pinchuk: It gives us our first database in that area. It provides database. We have positions in some of the bigger products in places like Mexico and some of our other, but this one greatly enhances it. You're talking about distribution and data that's in both of the situations. We like it from that perspective. Really what we're talking about here is we think that Diesel Laptops are a big, I don't know, a good opportunity for us, and we haven't mined it as comprehensively as other places. This was a way to bulk up our offerings where Diesel Laptops has a lot of good relationships with the diesel customers, with those big truck customers. It does have a database which provides you the beginnings of trying to do just what we did for cars only in trucks.

Speaker #2: It gives us our first database in that area. You know, in terms of it provides database. But we have positions. In some of the bigger products.

Speaker #2: In places like Mexic and some of our other. But this one, greatly enhances it. It's got a you're talking about distribution and data that's in both of the situations.

Speaker #2: So we like this from that perspective. Really, what we're talking about here is we think that diesel laptops are a big I don't know, a good opportunity for us.

Speaker #2: And we haven't mined it as comprehensively as other places. So this was a way to bulk up our offerings. Diesel laptops has a lot of good relationships with the diesel customers, with those big truck customers.

Speaker #2: And it does have a database, which provides you the beginnings of trying to do just what we did for cars, only in trucks.

Speaker #5: Okay. And you mentioned it added about 2.7 million of sales? This quarter, I think, in your narrative.

Gary Prestopino: Okay. You mentioned it added about $2.7 million of sales this quarter, I think, in your narrative.

Nick Pinchuk: I don't know if anybody said that. I don't think we said how much it would add.

Speaker #2: I didn't see that. I don't know. I don't know if anybody said that. I think I don't think we said how much it would add.

Speaker #2: But it's 4.7. I knew that number. I wasn't sure that I was authorized to say it, Gary. You know what I mean?

Gary Prestopino: It's $4.7.

Nick Pinchuk: Four point I knew that number. I wasn't sure that I was authorized to say it, Gary. You know what I mean?

Speaker #5: I'm sorry. There's a lot of people talking about it there. Would somebody said 4.7?

Gary Prestopino: I'm sorry. There was a lot of people talking about it. Somebody said $4.7 what?

Speaker #2: 4.7 million. 4.7 million. Gary, this is.

Nick Pinchuk: $4.7 million.

Gary Prestopino: Okay.

Aldo Pagliari: Gary, just remember, it was only a partial month. It was only in our results for a partial month-

Speaker #3: This is Aldo. Just remember, it was only a partial month. It was only in our results for a partial month of the month of June.

Aldo Pagliari: Yeah

Aldo Pagliari: in the month of June.

Speaker #5: Yeah. That's what I'm kind of getting at. What kind of contribution it would make to the top line. And I would assume it's somewhat margin accretive?

Gary Prestopino: Yeah, that's what I'm getting at, what kind of contribution it would make to the top line. I would assume it's somewhat margin accretive?

Speaker #2: Yeah. Now, wow. It's EPS accretive.

Nick Pinchuk: Yeah. Well, it's EPS accretive.

Gary Prestopino: It's EPS, right.

Speaker #5: It's EP right now.

Nick Pinchuk: Not margin accretive.

Speaker #2: It's not margin accretive. Not margin accretive.

Gary Prestopino: Okay. All right. Thank you.

Speaker #5: Okay. All right. Thank you.

Speaker #1: And our next question will come from Brett Jordan with Jefferies. Please go ahead.

Operator: Our next question will come from Bret Jordan with Jefferies. Please go ahead.

Speaker #4: Hey. Good morning, guys.

Bret Jordan: Hey, good morning, guys. Hey, Nick.

Speaker #6: Hey. Nick on your. On your shop tours. I think you talked about the golden age of vehicle to what the contribution of car count versus price is in sort of the underlying industry growth?

Nick Pinchuk: Morning

Bret Jordan: On your shop tours, I think you talked about the golden age of vehicle repair. Do you have any color as to what the contribution of car count versus price is in sort of the underlying industry growth? Are these shop owners you talk to saying they're seeing more traffic, or is it a lot of pricing?

Speaker #6: Are these shop owners you talk to saying they're seeing more traffic, or is it a lot of pricing benefit of. Well, I think look, you know Brett, it seems like it's you know of course, it's a windshield survey, you know?

Nick Pinchuk: Well, I think, look, Bret, of course, it's a windshield survey. The technicians I talked to said, the word they used was slammed. They acted like they were busy. I'm not sure the car count is the operative thing. I don't even know if you can tie it to pricing because there's one other factor. How complicated is each repair? See, repairs per vehicle are getting more complicated. I don't know if you can say that's price. I'm sure there's pricing, but I think what we're hearing is everything these days has alternate ideas. I saw something the other day, like one of the car lines has a brake system where, without a special tool that we provide, you have to dismantle the brakes to get to the bolts, to make the repair. That adds a lot of time.

Speaker #6: But the technicians I talk to said that where they use was slammed. So they acted like they were busy. I'm not sure the car count is the operative thing.

Speaker #6: I don't even know if you can tie it to pricing because there's one other factor. How complicated is each repair? See, repairs per vehicle are getting more complicated.

Speaker #6: So I don't think I don't know if you can say that's price I'm sure there's pricing. But I think what we're hearing is everything these days has alternate ideas.

Speaker #6: I mean, I think the whole idea I saw something the other day, like one of the one of the car lines has a brake system where without a special tool that we provide, you have to dismantle the brakes to get to the bolts.

Speaker #6: You know, to make the repair. And so that adds a lot of time. And so I think this kind of inconvenience is spread throughout the vehicles.

Nick Pinchuk: I think this kind of inconvenience is spread throughout the vehicles. The OEMs are not doing a good job of repairability. I think that's adding cost. I'm not sure which it is.

Speaker #6: And the OEMs are not doing a good job of repair ability. And so I think that's adding costs. So I'm not sure which it is.

Bret Jordan: Similar question on the OEM side, since you called out the dealers as a weaker section. Is that driven by individual dealer sentiment, or is there sort of direction from the OEMs as far as, is it driven by their creation of demand for a lot more complex tools and diagnostics? Is it OE-driven softness, or is it dealer rooftop-driven softness?

Speaker #6: Similar question on the OEM side, since you called out the dealers as a weaker section. Is that driven by individual dealer sentiment, or is there sort of direction from the OEMs as far as you know is it driven by their creation of demand for more complex tools and diagnostics?

Speaker #6: So is it OE-driven softness, or is it dealer rooftop-driven softness? You know, I think it's hard to pinpoint. But I think it's like this.

Nick Pinchuk: I think it's hard to pinpoint, but I think it's like this. The OEMs have stopped launching programs. Have reduced, and I don't want to say stopped, but it's substantially reduced. They were launching a lot of them. They were catapulting them into the market around electric vehicles, and then, I think if you write off $52 billion, it kind of daunts you on this kind of thing. I think they took a pause on this because my view is they're regrouping to have a future product line that adjusts for that difficulty or the hole that electric vehicles might've made. Therefore, you see those. You're not getting as many programs, and that affects us because we enable the program. That drives some of our volume down.

Speaker #6: The OEMs have stopped launching programs. They have reduced the I don't want to say stop. But a substantially reduced. They were launching a lot of them.

Speaker #6: They were you know catapulting them into the market around electric vehicles. And then you know kind of I think if you write off 53 billion dollars, it kind of dawns you on this kind of thing.

Speaker #6: And so I think they took a pause on this because the regroup my view is the regrouping to have a future product line that adjusts for that difficulty of the hole that electric vehicles might have made.

Speaker #6: And therefore, you see those. You're not getting as many programs. And that affects us. Because we enable the program. So that drives some of our volume down.

Speaker #6: And then the other places, I do believe when we talk to the dealerships, this is a time for them that's a little uncertain. What are the cars?

Nick Pinchuk: The other places, I do believe when we talk to the dealerships, this is a time for them that's a little uncertain. What are the cars? What are the new cars they're going to get? I'm not sure they know. I think that creates a little bit of uncertainty psychologically. I think they're kind of waiting a little bit. Now, what I've said I think is that our idea about weakness in OEMs doesn't mean that the dealers are so bad. It's that the dealers in combination with the OEMs backing down on programs have created a, I would call, a flat spot in our sales.

Speaker #6: What are the new cars they're going to get? I'm not sure they know. You know And so I think that creates a little bit of uncertainty.

Speaker #6: Psychologically. They know they want to so I think they're kind of waiting a little bit. Now, what I've said, I think, is that there are idea about weakness in OEMs doesn't mean that the dealers are so bad it's that the dealers in combination with the OEMs backing down on programs have created, I would call, a flat spot in our sales.

Speaker #4: Great. Thank you.

Bret Jordan: Great. Thank you.

Speaker #6: Sure.

Nick Pinchuk: Sure.

Speaker #1: And this will conclude our question and answer session. I'd like to turn the conference back over to Sara Verbsky for any closing remarks.

Operator: This will conclude our question and answer session. I'd like to turn the conference back over to Sara Verbsky for any closing remarks.

Speaker #7: Thank you all for joining us today. A replay of this call will be available shortly on Snap-on.com. As always, we appreciate your interest in Snap-on.

Sara Verbsky: Thank you all for joining us today. A replay of this call will be available shortly on snapon.com. As always, we appreciate your interest in Snap-on. Have a good day. Goodbye.

Speaker #7: Have a good day. Goodbye.

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

Q2 2026 Snap-on Inc Earnings Call

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