Snap-on Incorporated (NYSE:SNA) Q1 2024 Earnings Call Transcript April 18, 2024
Snap-on Incorporated beats earnings expectations. Reported EPS is $4.91, expectations were $4.66. Snap-on Incorporated isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the Snap-on Incorporated 2024 First Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.
Sara Verbsky: Thank you, Gary, and good morning, everyone. We appreciate you joining us today as we review Snap-on’s first quarter results, which are detailed in our press release issued earlier this morning. We have on the call, Nick Pinchuk, Snap-on’s Chief Executive Officer; and Aldo Pagliari, Snap-on’s Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance. Although will then provide a more detailed review of our financial results. After Nick provides some closing thoughts, we’ll take your questions. As usual, we’ve provided slides to supplement our discussion. These slides can be accessed under the Downloads tab in the webcast viewer as well as on our website, snapon.com, under the Investors section.
These slides will be archived on our website along with a transcript of today’s call. Any statements made during this call relative to management’s expectations, estimates or beliefs or that otherwise discuss management’s or the company’s outlook, plans or projections are forward-looking statements, and actual results may differ materially from those made in such statements. Additional information and the factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings. Finally, this presentation includes non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our earnings release issued today, which can be found on our website.
With that said, I’d now like to turn the call over to Nick Pinchuk. Nick?
Nick Pinchuk: Thanks, Sara. Good morning, everybody. As usual, I’ll start with the highlights of our first quarter. I’ll provide my perspectives on the results, on our markets and our path ahead. After that, Aldo will give you a detailed review of the financials. We believe that our first quarter once again demonstrated Snap-on’s ability to maintain its strength to engage headwinds, to manage challenges and to leverage the multiple opportunities of our markets. Looking at the results in total, we are encouraged. Like most quarters, we had turbulence from geography to geography and from operation to operation. North America was mixed, but with significant gains in critical industries. Internationally, our consolidated results were also mixed, but yielding overall positives as our operations in Europe and Asia overcame the effects of recessions in Europe and the delayed recovery in China.
Now the results. First quarter sales were $1,182.3 million about flat to last year on an organic basis, excluding $6.7 million from acquisitions and $2.5 million from favorable foreign currency our sales were lower by 0.8%. OpCo OI was $270.9 million, an increase of $11.1 million and the Opco operating margin for the quarter was 22.9%, up 90 basis points. Now both those numbers benefited from the legal payment referenced in our release. But with or without that legal flow, our first quarter Opco OI and the margin were among our best. It’s a strong statement given the turbulence of the day. Financial Services. Operating income grew to $68.3 million from last year’s $66.3 million, and the results combined with Opco to raise our consolidated operating margin to 26.5%, up over the 25.6% recorded last year.
And EPS, it was $4.91, including a per share benefit from a legal payment of $0.16, but up $0.31 or 6.7% from last year. So those are the numbers. Now let’s turn to the markets and the trends we’re seeing as we connect with our customers. From an overall perspective, we believe the automotive repair arena remains favorable. Vehicle OEM and dealerships continue investing in tools and equipment, preparing for the tie to new models, bringing the latest technology and drivetrains to the market. And in the quarter, our Repair Systems & Information Group, or RS&I, as we call it, expanded our reach into OEM programs and took advantage of the opportunities throughout its global footprint. And as we look forward, we see further prospects for RS&I capitalizing on that trend supplying dealerships and independent garages with just the products they need to confront the wave of modern platforms that are coming.
So the shops are strong. Now let’s speak of a technician. The guys and gals that twirl the wrenches, punch the keys, or tap the screens. This quarter, I have multiple occasions to visit with franchisees. And the report was generally that shops are humming, the bays are running at full capacity, and all that mirrors what the macro data says naturally. The car park is continuing to age. Now at an average of 12.5 years, and I think moving up, technician wages are rising and their hours worked are increasing. We believe it all signals ongoing and robust demand for repair. And you know it’s true. The activity is strong, but there is a difference between the industry overview and the technician outlook for the future and by extension, their purchasing sentiment.
The barrage of bad news, inflation, towards the border, the Red Sea, the election, the Iran bombing for the people of work, the fear of what’s coming around the corner impacts the outlook and paraphrasing the characters of Dune, fear is the outlook killer. It erodes confidence. Techs are well positioned, and they continue to invest but it’s in quick payback items that will make a difference right away, but don’t require a long-term payment stream. And in response, we’re continuing to redirect – we continue to redirect the Tools Group focus in our design efforts and our facility capacity and our selling and marketing efforts, working to match the current customer preference. So that’s the auto repair. Now our Commercial and Industrial Group or what we call C&I, serving critical industries in the most international of all our groups, and in the quarter, C&I manages the difficult challenge of balancing multiple economies that are in economic turbulence.
Europe now has more than half a dozen countries in technical recession. And then China – in the China environment, including the nearby countries, depending on it, they continue to struggle. India on the other hand, it’s booming. Modi has the train running. So that’s a positive in Asia amidst some very difficult economies. So that’s the geographies. Now let’s focus on the sectors. Areas like aviation continue to be strong. You don’t have to read the paper very long to realize there’s a significant focus on aerospace production and repair where the price for failure is high, and that arena is increasing demand for our precision torque products and for our asset control solutions to improve safety and productivity. In addition, in that sort of critical arena, custom kits, matching a set of items to a particular task it may it’s an important business, especially for the military, both domestically and internationally.
And with that, Critical industries is a substantial opportunity, and we are investing, expanding capacity, adding new products either organically or through the acquisitions we made over the last few years worth fortifying our runways for growth, extending outside the garage, and we know it’s paying off. So overall, the quarter was favorable despite the headwinds, Tools Group pivoting, RS&I expanding with OEMs, C&I extending beyond the garage solving the critical. And the OpCo OI percentage demonstrated once again the power Snap-on’s value creation processes, safety, quality, customer connection and innovation and rapid continuous improvement, developing innovative solutions that are born out of insight and observations right in the workplace.
This understanding melded with RCI, helps Snap-on to once again hold fast in the turbulence of the day. Well, that’s the macro overview. Now let’s move to the segments. In the C&I Group, sales were $359.9 million, representing a decrease of $3.9 million or 1.1%, and that includes $6.7 million in acquisitions, acquisition-related sales, $1.4 million in unfavorable foreign currency and an organic decline of 2.5%. It all reflects higher activity with customers in critical industries, more than offset by weakness in Asia-Pacific and in our power tools. From an earnings perspective, C&I operating income was $55.4 million. That was about the same as last year. The operating margin was 15.4%, up 10 basis points, and that was despite 30 basis points of headwind from currency and the acquisitions.
Within the quarter, the demand for custom kits, addressing particular critical tasks remain nicely robust with increased demand for control solutions like our Automated Tool Control products. It was a nice bright spot in C&I. On the other hand, power tools was down in the quarter, but help is on the way. Tuning power tool models born out of customer connection were recently introduced, each fulfilling specific needs for – each fulfilling specific needs. For repair garages, we launched the PH3045B AirHamer. This is a tool that replicates the effect of swinging a hammer and hitting a sizzle except the device, hurdles the hammer 3,500 times a minute. Vehicles are filled with components like ball joints, wheel bearing, suspension bushings that are packed in tight fit for maximum efficiency.
This assembly can be a bear. We know this from being in the garage. While with our new AirHamer, the easy-to-use retainer securely holds a chisel in place while the piston sledge hammers away. It’s powerful. But at the same time, the compact two-inch barrel – the two-inch barrel enables the access in tight spaces, delivering tremendous power, speed and energy with unlimited run time. It’s a real productivity enhancer, but the essential feature born out of watching the technicians in the shop is the best-in-class vibration reduction, created by special elastomer shocks, allowing the mechanic to pound away at these suspension components without fatigue or paying, no more store arms from hammer work. The new hammer was introduced late in the quarter and techs have already noticed.
Also on power tools, our cordless portfolio expanded with the introduction of a new 18-volt nibbler designed for collision repair and metal fabrication. It’s a big time saver. It speeds up work that once involve hand shears or other devices, help technicians cut any free-form shake conceivable out of tough sheet metal. Again, the design resulted from customer connection from watching the tech struggle with shears. Our new nibbler makes a big difference when cutting in defenders extracting a damaged panel or cutting a ceiling of a car accommodating installation of a sunroof or creating a place anywhere in the vehicle for placing emergency lighting, shining away for first responders. I have to tell you, I have to tell you, we are encouraged by these innovative new products.
And by all the others we’re planning to introduce as the days go forward. We know work and they all will make a difference right away. C&I, a quarter confronted with international headwinds, strong momentum in domestic markets, led by critical industries, extending out of the garage with growing strength. Now let’s talk about the Tools Group. The first quarter for the Tools Group was below our standard. However, we do remain confident, and we do see a pivot to focus on quick payback items registering a positive momentum and movement. Sales in the quarter were $500.1 million, including – reflected an organic decrease – including an organic decrease or reflecting an organic decrease of 7%. The Group’s operating income margin was 23.5%, down 100 basis points.
Notably, gross margin in the quarter rose 90 basis points, reaching 48.2%. You see shorter payback margins aren’t shorter on profitability. During the quarter, we worked to redirect our plants, guide our franchisees to innovate solutions that drive productivity, and we kept engaging our customer connection, observing the task executed in the bay and using the insights to design and deploy innovative and focused products offerings that are dedicated to making work easier, like two new products, just engineers – just engineered to address time-consuming tasks where simple repairs are made complex by limited – made complex by limited accessibility or by seized components that slow the work to a snail’s pace. You can see it in the garage. For instance, on General Motors, 6L80 and 8L90 transmissions, the valve body bolts are obstructed by the exhaust set up, making it very taxing to do this job with a standard ratchet or socket combination.
We were in some – we were in some of those GM garages and observed the problem firsthand, classic customer connection. And the innovation that followed in our quarter-inch drive Torx Plus EPL-10 low-profile inverted socket. That’s a mouthful. That innovation was released in the first quarter, and it does make GM transmission work easier. The new cushion design precisely maneuver – the new custom design precisely maneuvers between the exhaust assembly and the transmission engaging the fastener in such a way that provides enough clearance for a ratcheting box or a box-end wrench or a hand ratchet to access the bolts for easy removal with no exhaust disassembly require saving more than 45 minutes per repair right away. Techs working on GM transmissions can complete more work with this device and make more money.
They can do that right away, quick payback. Another example we saw, another example of that was we saw that removing the brake caliber pins on Toyota trucks and sports utilities was very difficult. The pins on 4Runners, Tacomas and Tundras are exposed to harsh road environments, often causing the parts to become immovable, regularly requiring like heat or excessive force to free the restricted fasteners. And each of those methods requires time and it raises the risk of damage to nearby components often elevating the complexity of the repair, taking a lot more time, watching the work. Our engineers produced a unique punch like bit that precisely aligned to an air hammer with the dimensions of the pin, maximizing the extraction force without endangering the surrounding systems.
Once again, simplifying the task and freeing the tech to move on to other jobs. It’s another quick payback item that’s now available and popular. Finally in the quarter, we expanded our only – the only U.S.-made locking plier lineup by releasing two new models, the LP5LN constructed with a tapered nose. It’s ideal for additional reach inside compliance space to easily access narrow workpieces. And the new LP5WC delivering a reliable gripping power is difficult to engage round objects like hoses. Beyond the special features of those two models, the full line offers our subcompact six-inch plier line offers increased accessibility and – because it’s small enabling text to maneuver and crowded engine compartments and under the dash. The design also provides unmatched clamping forces, that locking pliers, unmatched clamping forces that will not slip under load with the locking mechanism.
The pliers also serve as a second pair of hands. They’re going to lock them up – locking up, holding materials, securely in place, freeing up the technician’s hands to complete another step in the repair. And each unit, each of those locking plier units is forged and produced on our Elkmont, Alabama plant, and they’re the only locking models made in the U.S. Well, that is the Tools Group, pivoting to match the technician’s current preferences and needs, wielding our customer connections, deploying solutions that improve efficiency by making tasks easier. Now RS&I. The RS&I Group’s results confirmed, I think, what we’ve been saying all along, Snap-on is well positioned to support repair shops, both dealers and the vast networks of independent shops.
And in that regard, RS&I sales in the quarter were $463.8 million, up $17.2 million or 3.9% versus last year with an organic sales increase of 3.3%. Operating earnings for the group reached $112.9 million, reflecting an increase of $8.3 million or 7.9% versus last year. The operating income margin was 24.3%, rising by 90 basis points, a powerful performance driven by OEM-related activity and sales in undercar, helping shops prepare for new technologies. In terms of OEM-related activity and sales in undercar helping shops prepare for new technologies and enabling system upgrades in the growing collision market. We continue to seek to clearly see abundant runways for growth in RS&I, and we’re working to take advantage. One example of that is the launch of our new heavy-duty repair information software.
This package combines the vehicle interface capabilities of our NEXIQ heavy-duty diagnostic units with the horsepower of our Mitchell 1 information database. It’s an innovative solution for repair and heavy-duty industry, which over the past decade has seen an explosion of new technologies relating to sophisticated emission control along with advanced computer and electrical networks that all combines to present heavy mechanics with complex and complicated repair tasks. Now the solutions – now with solutions all located in one spot, tests can search by VIN number and access operating specification, troubleshooting tips and interactive wiring diagrams, all be specific to the particular vehicle, all big time savers and existing products was deployed in the quarter, and it’s a groundbreaking integrated platform.
The combined diagnostic capability together with vehicle information, it’s very powerful. And I can tell you, the heavy-duty industry has noticed. You can see it in the RS&I numbers. And in the quarter, our Diagnostics division also released its latest 24.2 software upgrade, expanding our broad range of vehicle coverage and test procedures throughout all our existing hardware. The new upgrade strengthens our already market-leading data positions. Technicians get access to our SureTrack vehicle-specific real fixes, repair tips and commonly replaced parts, all derived from our proprietary database of 2.7 billion repair actions and 355 billion data records unmatched insight, not only to interpret what the vehicle trouble codes are saying but to uniquely use the information to determine the exact problem, analyzing millions of data lines per car, predicting the most likely repair.
Snap-on uniquely provides this capability. And in this latest update, we continue adding new models and functionalities, making our proprietary software position even more effective and more powerful. We’re confident in the strength of RS&I. And we keep driving to expand its position with repair shop owners and managers to make – by making work easier with more and more great new products. Well, that’s Snap-on’s first quarter, sales flat, overcoming the significant headwinds, critical industries advancing, again, the tools group pivoting, matching the preference for quick payback products. OEM undercar repair information markets are remaining robust. The Opco OI margin, 22.9%, up 90 basis points and an EPS of $4.91, strong results that overcame the headwinds and benefited from a legal outcome.
All demonstrating the strength in the midst of turbulence, it was an encouraging quarter. Now, I’ll turn the call over to Aldo. Aldo?
Aldo Pagliari: Thanks, Nick. Our consolidated operating results are summarized on Slide 6. Net sales of $1,182.3 million in the quarter compared to $1,183 million last year, reflecting an 0.8% organic sales decline, partially offset by $6.7 million of acquisition-related sales and $2.5 million of favorable foreign currency translation. Activity in our automotive repair markets was mixed, gains in sales to OEM and independent shop owners and managers were more than offset by lower sales to technicians through our franchise van channel. Within the industrial sector for our C&I group, sales to customers in critical industries were up mid-single digits in the quarter as compared to last year. Consolidated gross margin of 50.5% improved 70 basis points from 49.8% last year, primarily reflecting benefits from lower material and other costs and savings from the company’s RCI initiatives.
Operating expenses as a percentage of net sales of 27.6% compared to 27.8% last year. In the quarter, as noted in our press release, operating expenses included an $11.3 million benefit for payments received associated with the legal matter. The 20 basis point improvement in the operating expense ratio is primarily due to the benefit from the legal payment partially offset by increased personnel and other costs, which includes a 20 basis point impact from acquisitions. Operating earnings before financial services of $270.9 million in the quarter, including the benefit from the legal payment compared to $259.8 million in 2023. As a percentage of net sales, operating margin before financial services of 22.9% compared to 22% last year. Financial services revenue of $99.6 million in the first quarter of 2024 compared to $92.6 million last year, while operating earnings of $68.3 million compared to $66.3 million in 2023.
Consolidated operating earnings of $339.2 million, which included the legal benefit compared to $326.1 million last year. As a percentage of revenues, the operating earnings margin of 26.5% compared to 25.6% in 2023. Our first quarter effective income tax rate of 22.2% compared to 23.1% last year. Net earnings of $263.5 million or $4.91 per diluted share, including an $8.8 million or $0.16 per diluted share after tax benefit from the legal payment compared to $248.7 million or $4.60 per diluted share in the first quarter of 2023. Now, let’s turn to our segment results for the quarter, starting with the C&I group on Slide 7. Sales of $359.9 million compared to $363.8 million last year, reflecting a 2.5% organic sales decline and a $1.4 million of unfavorable foreign currency translation, partially offset by $6.7 million of acquisition-related sales.
The organic decrease is primarily due to a double-digit reduction in the power tools business and a high-single digit decline in the segment’s Asia-Pacific operations mostly associated with lower intersegment sales. These declines were partially offset by a mid-single digit gain in sales to customers in critical industries. With respect to critical industries, military and defense related sales were robust as was activity in the aviation sector. Gross margin improved 200 basis points to 40.8% in the first quarter from 38.8% in 2023. This is largely due to increased volumes and the higher gross margin critical industry sector. Lower material costs and other cost savings from RCI initiatives and 50 basis points from the benefit of acquisitions.
Operating expenses as a percentage of sales rose 190 basis points to 25.4% in the quarter from 23.5% in 2023 primarily due to the effects of lower sales volumes, investments in personnel and other costs and a 70 basis point impact from acquisitions. Operating earnings for the C&I segment of $55.4 million compared to $55.8 million last year. The operating margin of 15.4% compared to 15.3% in 2023. Turning now to Slide 8. Sales in the Snap-on Tools Group of $500.1 million compared to $537 million a year ago, reflecting a 7% organic sales decline, partially offset by $600,000 of favorable foreign currency translation. The organic decrease reflects a high single-digit decline in our U.S. business, partially offset by a mid-single digit gain in our international operations.
Gross margin improved 90 basis points to 48.2% in the quarter from 47.3% last year. This improvement primarily reflects decreased sales of lower gross margin products. Operating expenses as a percentage of sales rose 190 basis points to 24.7% in the quarter from 22.8% in 2023, largely due to the lower sales volume. Operating earnings for the Snap-on Tools Group of $117.3 million compared to $131.7 million last year. The operating margin of 23.5% compared to 24.5% in 2023. Turning to the RS&I Group shown on Slide 9. Sales of $463.8 million compared to $446.6 million in 2023 reflecting a 3.3% organic sales gain and $2.5 million of favorable foreign currency translation. The organic increase includes a high-single digit increase in activity with OEM dealerships and a low-single digit gain in sales of undercar equipment.
Gross margin improved 150 basis points to 45% from 43.5% last year, primarily due to benefits from lower material and other costs and savings from RCI initiatives. Operating expenses as a percentage of sales rose 60 basis points to 20.7% from 20.1% last year primarily reflecting increased personnel and other costs. Operating earnings for the RS&I Group of $112.9 million compared to $104.6 million last year, the operating margin of 24.3% compared to 23.4% reported last year. Now turning to Slide 10. Revenue from financial services increased $7 million or 7.6% to $99.6 million from $92.6 million last year, primarily reflecting growth of the loan portfolio. Financial Services operating earnings of $68.3 million compared to $66.3 million in 2023.
Financial services expenses were up $5 million from 2023 levels, including $4.3 million of higher provisions for credit losses. In the first quarters of both 2024 and 2023, the average yield on finance receivables was 17.7%. In the first quarter of 2024 and 2023, the average yields on contract receivables were 9% and 8.7%, respectively. Total loan originations of $301.7 million in the first quarter represented an increase of $800,000 or 0.3% from 2023 levels. Increased originations of contract receivables were mostly offset by a low single-digit decline in extended credit originations. Moving to Slide 11. Our quarter end balance sheet includes approximately $2.5 billion of gross financing receivables, with $2.2 billion from our U.S. operation.
For extended credit or finance receivables, the U.S. 60-day plus delinquency rate of 1.8% is up 30 basis points from the first quarter of 2023, but unchanged from the rate reported last quarter. Trailing 12-month net losses for the overall extended credit portfolio of $54.1 million, representing 2.75% of outstandings at quarter end, which is up 16 basis points from the end of last quarter. Considering the current environment and despite these slight upward trends, we believe the delinquency and portfolio performance metrics remain relatively stable. Now turning to Slide 12. Cash provided by operating activities of $348.7 million in the quarter represented 129% of net earnings and compared to $301.6 million last year. The improvement as compared to the first quarter of 2023 largely reflects lower year-over-year increases in working investment, which included a reduction in inventory during the quarter as well as higher net earnings.
Net cash used by investing activities of $63.2 million primarily reflected net additions to finance receivables of $40.2 million and capital expenditures of $21.8 million. Net cash used by financing activities of $164.2 million included cash dividends of $98.2 million and the repurchase of 248,000 shares of common stock for $70.2 million under our existing share repurchase programs. As of quarter end, we had remaining availability to repurchase up to an additional $290.6 million of common stock under our existing authorizations. Turning to Slide 13. Trade and other accounts receivable increased $36.2 million from 2023 year-end. Days sales outstanding of 63 days compared to 60 days as of year-end and to 62 days as of the end of the first quarter of 2023.
Inventories decreased $35.4 million from 2023 year-end. On a trailing 12-month basis, inventory turns of 2.4 compared to 2.3 at year-end 2023. Our quarter end cash position of $1,121 million compared to $1,001.5 million at year-end 2023. Our net debt to capital ratio of 1.5% compared to 3.8% at year-end 2023. In addition to cash and expected cash flow from operations, we have more than $900 million available under our credit facilities. As of quarter end, there were no amounts outstanding under the credit facility, and there were no commercial paper borrowings outstanding. That concludes my remarks on our first quarter performance. I’ll now briefly review a few outlook items for 2024. With respect to corporate expenses, in the second quarter, we believe we could benefit from a legal payment similar to that received in the first quarter.
For the full year, we expect that capital expenditures will be in a range of $100 million to $110 million, and we currently anticipate that our full year 2024 effective income tax rate will be in the range of 22% to 23%. I’ll now turn the call back to Nick for his closing thoughts. Nick?
Nick Pinchuk: Thanks, Alan. Well, that’s the first quarter. Strength in the midst of turbulence. Even with a part of the enterprise below standard, you see Snap-on is a business that reaches varied customers in different industries and in various geographies united in a coherence that is the criticality of work, the essential nature of what we do. And we have the opportunity and advantage – we have opportunity and advantage in virtually all of those arenas. And as a consequence, even when the largest of our entities is not a standard, we find a way in other areas to maintain overall strength. It’s that coherent strategic breadth and the experience and capability of our team to execute that has made Snap-on so resilient, moving consistently upwards for all these years, and this quarter was another demonstration of that resilience.
C&I, engaging economic challenges across geographies, extending to critical industries, proving that Snap-on can roll out of the garage, exploiting a considerable opportunity and do it profitably. The Tools Group acting to adapt, committing to accommodate the tech’s certain outlook and their preference for quick payback products and doing it with still enviable margins. In fact, with gross margins up 90 basis points showing the promise of their pivot. RS&I, seeing opportunities with repair shop owners and managers and making the most of it despite the challenges in Europe, volume and margins growing in a very imperfect environment and the credit company, working against the grain of short payback preferences and still raising profit. And it all came together to keep activity flat despite the difficulty to register an Opco operating margin of 22.9%, up 90 basis points and to record an EPS of $4.91, numbers that are among our strongest ever results with or without the legal benefit.
And as such, we look ahead with confidence, fortified by our inherent advantages in our product, deep, wide and growing, solving more critical tasks every day, advantages in our brand. Snap-on is the outward sign of pride, working men and women taking their jobs and advantage in our people, committed, capable turbulence tested many times a team that knows how to ring the positive out of the difficult and fueled by those advantages, we believe Snap-on will maintain its strength, moving positively throughout the 2024 and well beyond. Now before I turn the call over to the operator, I’ll speak directly to our franchisees and associates worldwide. The first quarter was a resilient and robust demonstration of Snap-on strength against challenge.
And it all reflects your extraordinary effort to make it sold. For your contributions to the results, you have my congratulations. For the special capabilities you bring to bear on behalf of our team every day, you have my admiration. And for the unshakable belief you consistently display in our future, you have my thanks. Now I’ll turn the call over to the operator. Operator?
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