Q2 2025 Earnings Call Transcript

Good day, and welcome to the Snap-on Incorporated 2025 Second Quarter Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

To ask a question, you may press star then one on your touch-tone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms.

Sara Verbsky, Vice President of Investor Relations. Please go ahead, ma'am.

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

Aldo will then provide a more detailed review of our financial results. After Nick provides some closing thoughts, we'll take your questions. As usual, we've provided slides to supplement our discussion. These slides can be accessed under the Downloads tab in the Web viewer as well as on our website, snapon.com, under the Investors section.

These slides will be archived on our website along with the 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 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, the 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?

Thanks, Sara. Morning, everybody. As usual, I'll start the call by covering the highlights from our second quarter. And I'll tell you right now, we're encouraged by the results.

Resilience and balance against an environment that's been quite turbulent. It's like one long mad minute where the commercial ground keeps shifting. But with the resilience of our markets, the balance of our portfolio, our advantages in products, brand, and people, we navigated the roller coaster and exited the quarter stronger than when we entered. So that's my view.

And as we proceed today, I'll fill you in with more color on our financial results, on our markets, the current environment, the progress we made, and I'll give you another take on what I think it all means. Then Aldo will move to a more detailed review of the financials. Let's talk about the results. Our sales of $1,179,400,000 as reported were flat to last year.

Including $8,600,000 in favorable foreign currency translation, our organic sales were down seven-tenths of a percent. They were mixed, but overall balanced. Opco operating income for the quarter was $259,100,000, 7.6% below last year, which included $11,200,000 from the nonrecurring 2024 legal win. OI margin was 22%, lower by 180 basis points versus last year, which included a higher basis points from that legal matter.

Notably, the gross margin was 50.5%, 10 basis points behind last year reflecting continued resilience. Rapid continuous improvement balanced 50 basis points of unfavorable currency transactions. In effect, our OpCo OI gap primarily represented our ongoing investment in maintaining and strengthening our advantage of product, brand, and people, believing as we did in the pandemic, that it's best to emerge from the disruption at full strength and we believe we're on course to do just that. For financial services, operating earnings of $68,200,000 were down 2.8% from last year's $70,200,000. And combined with the OpCo results, the overall OI margin for the quarter was 25.5%, which compared to the 27.4% recorded last year, which included the legal benefit.

This time was 90 basis points. EPS for the quarter was $4.72, 35¢ below last year. 16¢ from last year's legal payment was included in the 2024 number and this year's level included a 9¢ impact higher pension amortization costs. In other words, there were 25¢ of headwinds in the year-over-year comparison of EPS. So now let's speak about the market.

So those are results, but now let's speak about the market. We believe the automotive repair environment continues to be favorable. We did see mixed but improved results with the technician. The tools group was up low single digits in the US network, while the international vans were flat.

And from what we're hearing directly from the franchisees in the text, from the grassroots, I believe vehicle repair emphatically remains a very favorable place to operate, and the industry metrics continue to confirm that view. Miles driven, average vehicle age, household spend on repairs, tech count, and tech wages, they're all up. Now the macro environment is still turbulent. But the tech, uncertainty has stabilized.

And having said that, it remains significant. In all that, however, the tools group pivot does appear to be gaining traction. And overcoming the ants. You can see it in our second quarter results.

We like the way the numbers are moving. It's a positive sign. On the other side of auto repair where repair systems and information, the RSNI group is displaying encouraging progress, expanding Snap-on's presence with repair shop owners and managers with particular strength in OEM dealerships. Things are looking okay.

Upgrading facilities and equip you know, the OEM dealerships upgraded facilities and equipment to match the growing complexity of the new models. Now there are pockets of hesitation on garage projects. With some independent shops thinking that delay in the turbulence is the right move. But in general, the shops know that deeper complexity is rolling.

And the challenges are coming, and they must be ready. So in general, the sentiment remains strong, and you can see it all over the RSNI results. And for critical industries. Now here, we saw uncertainty and hesitation early in the period.

Liberation Day and the weeks that followed create a lot of windage in project planning and execution. Many businesses adopted a wait-and-see approach waiting to let the trade program develop before pulling the trigger. And we did see postponements. As the quarter progressed, however, the initial shock gave way to what I would call accommodation.

Project Flow came back, and our order book has grown. The critical industries built momentum through the quarter, and they remain a very attractive place to operate despite what we believe may have been a shock blip in the quarter. So, overall, I describe our markets as continuing to offer opportunities that we believe display momentum. Challenges do exist, there are headwinds.

But we're confident with our advantages and strengthening product lines that solve critical tasks in our extraordinary brand, that marks the serious, the critical, and the professional. And our very experienced team. That's capable, committed, and battle-tested will prevail against the difficulties and can continue moving positively. So now let's move to the segment.

The commercial and industrial group was the place where most impacted by the shock early in the quarter. You know what? It has the largest international presence, and its critical industry vision has a substantial slice of project business. So the group's second quarter as reported volume decreased 6.5%, including $4,500,000 in favorable foreign currency translation and an organic sales decline of 7.6%.

C and I's operating income was $46,900,000 below 2024 levels by $15,300,000. Operating margin was 13.45%. Down 320 basis points. But we did see upward motion as the quarter progressed. As the customers accommodated to the environment.

So we're confident in and committed to extending in the critical industries. And we'll keep strengthening our position with C and I as we move forward observing the task, using the insights create to create products that make work easier. A great example is the next generation our next generation of the next generation quarter-inch drive fourteen four volts cordless ratchet. Increased power and speed, 40 foot-pounds of torque for breaking loose stubborn fasteners, and once freed, the tools 400 rpm kick in and the fasteners fly off.

It's a real-time saver. I'm working in North Carolina plant. Just released two models with CTRA 25 offering a compact frame and a CTRA 27 with an extended neck. Two tools to maximize efficiency with techs working at hard-to-reach out-of-the-way applications.

And there are other great features of the tools. The brushless motors provide improved durability and longer run time. The variable speed trigger gives the tech more control. Preventing, you know, in this situation that overtighten, that can damage components, and a ring of fire creates a 360 degrees of daylight.

Beaming from six LEDs generating 27 lumens, illuminating even a cavernous workplace. All of this is serving to make work much easier. The CTR eight twenty-five and eight twenty-seven compact frame and long neck designs techs love them. They know they need both of them.

And based on a strong recession, it's now clear that they're destined for our million-dollar hit product list. Now the specialty torque business remains red hot. It actually had a strong quarter. Part of the reason is that our lineup continues to expand.

Moving to meet the increasing complex challenges of essential bolting and tensioning. And recently, we introduced the new CTM five fifty unit It joined the so it joined our rolling over a cordless torque multiplier. This tool is 66% lighter and 20% smaller than its big brother, the one-inch CTM 800. And it delivers effortlessly. It delivers torque all the way 160 foot-pounds to 550 foot-pounds.

It's ideal for tackling a range of tasks. In a growing number of heavy-duty applications that require precise torque. The new tool enables much greater efficiency and comfort. It replaces and it replaces the commonly used impact gun and torque wrench combinations with a single tool eliminating several, you know, cumbersome steps providing a much safer and more ergonomic path to repair.

It's a design that combines the efficiency of our extraordinary Norbard gear designs with the brushless motors or our power tools operation to make problem torque. To make precision torque at high output, the a breeze. And, you know, the unique Snap-on Advanced Cooling system, no pun intended, means extended use and increased durability. The CTM also has multiple connection options.

Enabling the accuracy of the pre-procedure to be documented and reviewed ensuring that the job was done correctly and that the bus or semi-truck or bulldozer will operate as designed and safely and without failure. Our CTM five fifty, sophisticated, powerful, versatile, with the durability to tackle the harshest environments servicing the needs of the critical. And as you might imagine, it's been well received. Well, that's c and I.

Absorbing the shock. Moving forward, delivering solutions that make critical work easier, safer, and more productive. Now on to the tools group. Organic sales were up 1.6% with a low single-digit improvement in The US and the international network flat to last year.

The operating income was $116,700,000, and that compares with $114,800,000 in 2024 with an operating margin of 23.8% flat to last year. But still one of the group's top margin levels ever. Achieved against the wind. As I said, technicians are still cash-rich for competence poor.

They're still hesitant to tie themselves to long-term obligations. Originations were down 4.9%. Sales items like large tool, storage box, boxes decreased in the quarter, but our connection with grassroots customers indicate that the uncertainty has stabilized. And over the period, the tools group pivot to faster payback items, gain tech gain traction against the continuing wars, the rapid-fire announcements in the capital, and the threat of inflation.

All through the quarter, we kept working. Shift in production. Refocusing marketing and promotional campaigns. And most important of all, introducing innovative new products that make an immediate impact offerings that created a short-term payback.

So for tech servicing, growing comp sec servicing vehicles of growing complexity, access is big. They need help reaching, squeezing, contorting their way into compact areas. Trying to make repairs without the dismantling things like parts like components like fenders or grills or dashboards. Every day, we're there in the garage observing these tasks, developing the solutions that make the work easier and more profitable.

It's Snap-on's principle value-creating mechanism well in the during the quarter, the tools group launched a number of new products. Each delivering unparalleled access. And matching the customer's preference for faster paybacks One is the SGA s one zero two, two a two-piece radiator pick. Pick set.

Each unit is seven inches from handle to the tip. And offers and offers a unique design. One is hooked shaped, ideal for pulling hoses away, and the other is straight. Perfect for pushing the coolant lines free.

The complete set is built on our l in our Oakmont, Alabama facility. And, you know, it might seem trivial, I assure you, modern vehicle engine bays are jam-packed. Hoses are no longer out in the open. And now even basic repairs more often than not requires re require removing fan shroud shrouds or a range of other parts.

But with these tools, a tech can extract the hose with ease. Conventional setups have similar geometries, but they require much more space to function. Our new picks get great access and they do save a lot of time, and a text of notice. Another quick payback is our f k c 72. A three-inch h drive, stuffy length, hand ratchet.

Collision in our Elizabethton, Tennessee plan. It's our, smallest three h interaction ever. I mean, it's tiny. About the length of your pinky.

And, you know, there are a lot of narrow passages in the car. Well, this stuff, you can go wherever your fingers can reach. But even though it's small, it offers great strength courtesy of Snap-on's unique dual pull system. And the 72 tooth design enables five degrees a five-degree swing art another access enabler.

And the sealed head increases reliability, keeping the debris that can muck up the works from entering the gear mechanism. It's another snap-on must-have for Sirius Tech, and it helped drive the pivot in the core. Perhaps best of all, just released, the redesigned 15-inch extra-long needle nose plier set cold forged at our Milwaukee plant. Now that's a process that's difficult to man to master.

Yeah. But if you get it right, Milwaukee's one of the few who can, it results in greater strength and delivers tighter tolerances without additional and more costly machining. The long the long plier neck reaches to restricted openings, creating access. And the cold forging process and the associated shaft strength enabled 85% more gripping power than other models.

And that makes this tool a real-time saver. I mean, if you drop a part in a recessed area, no need to disassemble the workpiece. These units will navigate through the confined space, and they'll grab the lost component without letting go, making sure of a quick making sure and quick retrieval. That's a great and significant advantage.

Each of these new products makes work easier and repairs faster. And all three have already achieved what we call our $1,000,000 hit product status. And meeting with tech in the last quarter, we talked about this, about the bottom end of the bigger ticket items. After meeting the techs and meeting the techs preference for faster payback tool storage, our plan Algona, Iowa released a special offering of entry-level KRA twenty-four twenty-two classic series roll tab.

Doctors, 55 inches wide. Go from one piece welded body which is with reinforced corners and a 14 gauge steel bottom panel that supports a payload of 2,400 pounds. Over a ton of tools. It's ideal for organizing a tech investments with the two drawers spanning 50 inches wide one five-inch deep for deep sockets, and a three-inch drawer for storing long flybars and extensions.

The box is functional. Rugged, and it's relatively economical. But we'll get your attention in this hooray It's the array of eye-popping two-tone paint schemes. One, a black case with extreme green doors and black trim is my personal favorite.

I can tell you, it is bright. Any tech would stand out with this beaming box in this space. Siri just came out. And it's already had significant demand.

So that's a tools group. Pivot. Gaining on uncertainty. Back to growth, exiting on the quarter with momentum, and great American-made products were the big drivers.

Now RSNI. Sales in the second quarter were $468,600,000. With an organic gain of 2.3%, a high single-digit advancement in diagnostic information. And strong double-digit improvements in our OEM businesses. Operating earnings for RS and I were $119,800,000, up $6,200,000 or 5.5%.

And the operating margin of 25.6% was 60 basis points better than 02/2024. Now just a little fun fact. The OI margin for RS and I has increased year over year for 12 of the last 13 quarters. Sixth Street, That's the RISE software and the power of RCI. Arsenide shine through the turbulence leveraging our customer connection and launching innovative products.

One example is our is if you call him, Triton, born in our San Jose facility. Positioned in the middle of our intelligent diagnostics offering, provides a wireless connection between the car and the handheld, Techs can move freely around the bay, under the car, under the car inspecting, troubleshooting, and testing without restraint. And this is important. It does that without losing the lightning speed that's the hallmark of our wired unit.

And trying this two-channel lab scope lab scope now provides zoom capability, and this is crucial. When a waveform glitches happen in a blink of an eye, and they often do, They're hard to catch on a standard unit. So Triton customers can now record playback the test, magnify the pattern, zero in on the abnormally, identify intermittent problems. That's right.

Flex it's flexibility, speed, zoom capability, eight-hour battery life for extended use, and four times the memory. Handling more procedures and data handling more procedures and data than ever. The launch easily exceeded prior releases. As you might expect, the gang this gangbusters platform is powerful in tech hands.

It's a clear winner in the shops. Arch and I is on a roll. Great diagnostic units, powerful databases, Mitchell Pro demand repair information, the proprietary power of intelligent diagnostics. Effective shop management system, continuing upward progress, driven by great hardware, significant advantage of the software, and a dedication to RCI.

We're gonna keep driving and expand RS and I's position. We're repair shop owners and managers offering more new products developed by our value creation process, and we're confident it's a winning formula. Well, that's our second quarter. Marked by both challenge and advancement.

C and I down. Impacted by the shock of liberation day and a bout of wait and see but some recovery. Is underway as a combination develops. The tools group The pivot to quicker paybacks, gaining traction, Sales up 1.6% organically.

OI margin, 23.8%, flat to last year. But representing the third highest in the group's history. Against the wins. And RS and I, sales up 2.2%, OI margin, 25.6%.

Up 60 basis points. Software rising and RCI delivering again. It all came together for overall sales of $1,179,400,000. Flat. Gross margins, 50.5%, down 10 basis points.

Unfavorable incur unfavorable currency transaction and the impact of value volatile trade policy balanced by RCI. And OI margins of 22% down, 80 basis points adjusting for last year's legal benefit. Primarily reflecting the conviction to keep investing in product and brand and people. Results demonstrating operational strength.

All achieved in difficult conditions. It was an encouraging quarter. I'll turn the call over to Aldo.

Thanks, Nick. Our consolidated operating results for the second quarter are summarized on Slide six. Net sales of $1,179,400,000 in the quarter were unchanged from last year, reflecting an $8,600,000 organic sales decline that was offset by favorable foreign currency translation. Sales in our automotive repair markets were up.

Gains both in our franchise van channel and in activity with OEM dealership and in independent repair shop. Owners and managers. Within the industrial sector, or our C and I group, sales were down year over year reflecting the economic and geopolitical uncertainty that occurred throughout the period. Consolidated gross margin of 50.5% compared to 50.6% last year.

And included 50 basis points of unfavorable foreign currency effects. Partially offset by benefits from the company's RCI initiatives. While Snap-on is relatively advantaged in the current tariff environment, generally manufacturing products in the markets where they are sold Our cost can be affected by trade policies. In the quarter, we mitigated the effects of incremental tariffs, managing material and other costs, so that there was no meaningful impact on gross margin.

With respect to the unfavorable foreign currency effects in the quarter, much of this was due to transaction impacts of the year over year strengthening of the Swedish krona versus the euro and the US dollar. As we have factories in Sweden serving both the C and I and RS and I groups. In C and I, manufacture cutting tools for our European and emerging markets, while in the RS and I, our car aligner facility, produces collision products that are sold globally. Operating expenses as a percentage of net sales rose a 170 basis points to 28.5% from 26.8% in 2024, mostly due to a nonrecurring benefit of $11,200,000 from legal payments received last year and increased personnel and other costs including ongoing brand investment.

Operating earnings before financial services of $259,100,000 in the quarter compared to $280,300,000 in 2024. As a percentage of net sales, operating margin before financial services of 22% compared to 23.8% reported last year which included a benefit of 100 basis points from the legal payments. Financial services revenue of $101,700,000 in the second quarter, compared to $100,500,000 last year, while operating earnings of $68,200,000 compared to $70,200,000 in 2024. Consolidated operating earnings of $327,300,000 compared to $350,500,000 last year. As a percentage of revenues, the operating earnings margin of 25.5% compared 27.4% in 2024 Again, including a benefit from the legal bans.

Our second quarter effective income tax rate twenty two point six percent was 22.5% in 2025 and in 2024. Net earnings of $250,300,000 compared to $271,200,000 in 2024. And net earnings per diluted share of $4.72 in the quarter compared to $5.7 per diluted share last year. When comparing the quarter's earnings per share with the second quarter of the prior year, there is 25¢ per share of headwinds on a year over year basis. In the second quarter of twenty twenty five, diluted earnings per share included approximately $09 per share of increased year over year nonservice and net periodic pension expenses.

Primarily from higher amortization of actuarial losses. While the 2024 included 16¢ per share benefit from the legal payments. Now let's turn to our segment results for the quarter. Starting with C and I Group on Slide seven, Sales of $347,800,000 compared to $372,000,000 last year, reflecting a 7.6% organic sales decline.

Partially offset by $4,500,000 of favorable foreign currency translation. The organic reduction includes double digit decreases in the segment's Asia Pacific and European based hand tool businesses, and a mid single digit decline in activity with customers in critical industries. Partially offset by a high single digit rise in the specialty torque operation. Overall, the sales decline reflects a reduction in certain cross border sourcing activities and the current trade situation.

And the slowdown of projects by our customers in some industries and geographies including US aviation and the military. With respect to critical industries, demand was challenged in April, but improved as we moved through the quarter. Gross margin of 40% in the second quarter compared to 41.7% in 2024. This decline was primarily due to lower sales volumes, and 50 basis points of unfavorable foreign currency effects. Partially offset by savings from RCI initiatives.

Operating expenses as a percentage of sales of 26.5% in the quarter compared to 25% largely reflecting the impact of reduced sales volumes well as increased personnel and other costs. Operating earnings for the C and I segment of $46,900,000 compared to $62,200,000 last year. The operating margin of 13.5% compared to 16.7% in 2024. Turning now to slide eight. Sales in the Snap on Tools Group of $491,000,000 compared to $482,000,000 a year ago.

Reflecting a 1.6% organic gain and a $1,200,000 of favorable foreign currency translation. The organic increase reflects a low single digit rise in United States business, activity in our international operations was essentially flat. During the quarter, we believe our ongoing pivot to shorter payback items was successful in overcoming the continuing uncertainty of technician customers in the current environment. Gross margin declined 50 basis points to 48.3% in the quarter from 48.8% last year.

Mostly due to 40 basis points of unfavorable foreign currency effects. Operating expenses as a percentage of sales improved 50 basis points to 24.5% the quarter from 25% in 2024. Largely reflecting the higher sales volume. Operating earnings for the Snap on Tools Group of a $116,700,000 compared to $114,800,000 last year. The operating margin of 23.8% was unchanged from 2024. Turning to the RS and I group.

Shown on slide nine. Sales of $468,600,000 compared to $454,800,000 in 2024. Reflecting a 2.3% organic sales increase and $3,100,000 of favorable foreign currency translation. The organic gain includes a double digit increase in activity with OEM dealerships, and a high single digit gain in sales of diagnostics and repair information products to independent repair shop owners and managers. These gains more than offset a high single digit decline in sales of undercar equipment, including collision repair products.

Gross margin improved a 130 basis points to 46.8% from 45.5% last year, primarily reflecting increased sales of higher gross margin brides. And benefits from RCI initiatives. Partially offset by higher material freight and other costs as well as 40 basis points of unfavorable foreign currency effects. Operating expenses as a percentage of sales rose 70 basis points 21.220.5% in 2024, largely due to increased personnel and other costs.

Operating earnings for the RS and I group of a $119,800,000 compared to $113,600,000 last year. Operating margin improved 60 basis points to 25.6% from 25% reported in 2024. Now turning to slide 10. Revenue from financial services of $101,700,000 reflected an increase of $1,200,000 from $100,500,000 last year. Financial services operating earnings of $68,200,000 compared to $70,200,000 in 2024. Financial services expenses of $33,500,000, compared to $30,300,000 last year. The increase is primarily due to $1,500,000 higher provisions for credit losses.

As well as a rise in personnel and other costs. As a percentage of the average financial services portfolio, expenses were 1.3%. The second quarter of twenty twenty five. And 1.2% in 2024. In the 2025 and 2024, the respective average yields on finance receivables were 17.517.7%.

While the average yields on contract receivables were 9.18.9%, respectively. Total loan originations of $293,000,000 in the second quarter represented a decrease of $15,100,000 or 4.9% from 2024 levels including a 5% decline in extended credit origination. The reduction in extended credit originations mostly reflects lower sales of discretionary big ticket items such as tool storage, partially offset by higher originations associated with the successful launch of the new 11. Our quarter end balance sheet includes approximately $2,500,000,000 of gross financing receivables and $2,200,000,000 from our US operation.

For extended credit or finance receivables, The US sixty day plus delinquency rate of 1.8% is up 20 basis points from the second quarter of twenty twenty four, but down 20 basis points from the rate reported last quarter. Trailing twelve month net losses for the overall extended credit portfolio of $69,500,000 represented 3.4% of outstanding at quarter end. We believe these portfolio performance metrics remain relatively balanced considering the current environment. Now turning to slide 12. Cash provided by operating activities of $237,200,000 in the quarter compared to $301,100,000 last year.

The lower cash flow generation as compared to the 2024 largely reflects higher year over year increases in working investment and lower net earnings. Net cash used by investing activities of $46,000,000 mostly reflected net additions to finance receivables of $26,400,000 and capital expenditures of $19,700,000. Net cash used by financing activities of a $170,900,000 included cash dividends of $111,800,000, and the repurchase of 250,000 shares of common stock for $79,000,000 under our existing share repurchase program. As of quarter end, we had remaining availability to repurchase up to an additional $357,900,000 of common stock under our existing authorization.

Turning to Slide 13. Trade and other accounts receivable represented an increase of $26,800,000 from 2024 year end. The day sales outstanding of sixty five days were down one day sequentially from last quarter, and compared to sixty two days at year end 2024. Inventories increased by $54,300,000 from 2024 year end primarily due to $37,400,000 of currency translation and some investment intended to mitigate supply chain uncertainty. On a trailing twelve month basis, inventory turns of 2.4 were the same as year end 2024. Our quarter end cash position of $1,458,300,000 compared to $1,360,500,000 at year end 2024. In addition to our existing cash, and expected cash flow from operations, we have more than $900,000,000 available under our credit facility.

There were no amounts borrowed or outstanding under the credit facilities during the year, nor was any commercial paper issued or outstanding in the year. That concludes my remarks on our second quarter performance. I'll now review a few outlook items the balance of the year. With respect to corporate costs.

We currently believe that expenses for the remainder of 2025 will approximate $27,000,000 per quarter. Additionally, during 2025, as previously shared, we recognize and expect to continue to incur approximately $6,000,000 pretax per quarter of increased nonservice pension costs largely due to higher of actuarial loss. These noncash costs are recorded below operating earnings as part of other income and expense net. On our statement of earnings, and we'll have about a 9¢ per diluted share quarterly negative effect on EPS.

For the balance of 2025. Expect that capital expenditures will approximate $100,000,000 and we currently anticipate that our full year 2025 effective income tax rate will be in a range of 22 to 23%. Our expected range, which factors in The US tax bill that was recently passed, is unchanged from previous estimates. Finally, in 2025, our fiscal year will contain fifty three weeks of operating results with an additional week occurring at the end of the fourth quarter. This occurs every five or six years, and historically, it has not had a significant effect on our full year or fourth quarter total revenues or net earnings.

I'll turn the call back to Nick for his closing thoughts. Nick?

Thanks, Aldo. Snap-on second quarter results marked by resilience, portfolio balance, shock accommodation, and progress. C and I. International markets and critical industries disrupted by Liberation Day.

The shock giving way to accommodation and accommodation in the storm. Or to the storm. 1.6% organically. US up. International flat.

Return to positive. OI margins, 23.8% flat to last year. But among the group's strongest ever. RS and I, continuing strength.

Sales up 2.3% organically. Opco OI margin of 25.6%, up 60 basis points. Rising again. And it all came together for an overall demonstration of performance against turbulence.

Sales of the for the corporation were $1,179,400,000, essentially flat in the difficulty. Opco OI margin, 22%, down 80 basis points adjusting for last year's legal benefit, with the gap driven primarily by spending to re to maintain full strength preserving advantage for when the turbulence abates. An EPS $4.72, against, you know, comparisons against 25% 25¢ a headwind. We believe the we believe that that these results demonstrate our overall strength.

They also highlight our our relative advantage in the turbulence of the volatile trade policy. Strengths rooted in our strategy of making in the markets where we sell, and in our solid structure of broadly based facilities. 36 factories, 15 in The US, and and in a considerable distributed know-how. We make a version of our products in almost every region, but especially in The US. We believe this advantage is clearly on display in our quarter's gross margin.

Of 50.5%, down 10 basis points from last year. But a shortfall more than explained by 50 basis points of unfavorable currency that was offset by RCI. You see, we said we believe we're resistant to tariffs. And we meant it.

And we further believe that as we move forward, we have we have momentum as the shock recedes. And we have advantage rooted deeply in our products, continually matching the increases in complexity of work making it much easier. Advantage in our brand that really does mark the professional and displays personal and collective pride and dignity, And, of course, advantage in our people, dedicated, capable, battle-tested, and wielding the Sapphire Valley creation processes to improve every day as they demonstrated in the quarter. So we believe that as we move forward using those strengths inherent in our enterprise, we'll prevail against the difficulty execute on our abundant opportunities, and move positively through the last half of 2025 and well beyond.

Before I turn the call over to the operator, I'll speak directly to our associates and franchisees. I know many are listening. My friends, I know that the encouraging results we just discussed was created by your efforts. Past and present.

For your progress against the turbulence, you have my congratulations. For the energy you bring to our enterprise every day you have my admiration. And for your confident and unwavering commitment to our future, you have my thanks. Now I'll turn the call over to the operator.

Operator?

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

If at any time your question has been addressed, and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Luke Junk with Baird. Please go ahead, sir.

Good morning. Thanks for taking the questions. Nick, I wanna start just with the big shift we're seeing in tools group one q into two q. I guess with the benefit of hindsight, is there anything that sticks out to you as, I guess, what I'd say, less normal in the first quarter in the tools group or maybe particular areas where you may have gotten caught a little bit flat-footed in this environment.

Guess, thinking through the lens of two q, now that feels a lot more normal. In terms of the company's ability to navigate this turbulence. Just you know, what was, you think, the most important area of internal execution this quarter? And should we think you can lean into that even more into the back half of the year?

Well, the part of it was, I think I think the technicians, I think, you saw I think there was some evidence that the technicians had more uncertainty accelerating uncertainty in the first quarter versus prior quarter. You saw consumer sentiment drop from December to January by I think it was 20 basis point 20 points. The lowest since '22 since the last peak. You know, problem with supply chain.

And it's still down, but it's rebounded a little bit. I would say that the early days of the administration spooked the grassroots. And so our pivoting was going. Better.

Know, which has been going, but that spooking, that 20 basis I reflected in the 20 basis points, and I don't mean to tie it exactly to that. Really outran the pivot. But it kinda stabilized. They aren't affected so much by tariffs.

You know, liberation day didn't affect them so much. So they're more sitting there, and then not much happens, really. And the way that, I guess, the bombing of Iran happened, but not so much. And we started to gain ground on that.

That's what happened. I guess the one learning we learned in the first quarter that we applied in the second quarter you might remember that I talked in the first quarter about I think we can nibble into the lower end of the big ticket items like the solace in the first quarter with salute to solace was pretty successful. And we sold some heavy-duty cards in the first quarter that were economical. And so we did some more of that in the second quarter.

I talked about it on the call that classic series with, you know, box that gives you know, cheaper than, you know, the other series. And holds a ton of tools. And has these eye-popping colors. That was pretty popular.

So I think we learned we can add to the pivoting to what the obvious things are, like hand tools, power tools, and other stuff like that. Sort of eating at the bottom end of the big line and focusing on that. And I think that's one of the things we did. Not sure that keeps working because you always have to do some different things.

But I think the pivot is now working pretty well. And I think we have moment. I've said this in this thing we exited the quarter stronger than when we entered.

What about the origination side things, Nick? And just generating demand for new credit? You mentioned in your script the you know, the benefit of diagnostic units that we're, you know, we're seeing in that originations decline moderating sequentially, but do you think there's an opportunity to get franchisees to lean into credit a little bit more as we go through the back half of the year?

No. Your guess is good as mine. I don't know. You know you know what I mean?

Look. I think I think this. Originations were better. You know?

Like, know, for government work, they're like, we're down half as much That sound that's a tip-top statement. We're down half as much as we were in the first quarter. I think we're down more This quarter, we're down 4.8%, 4.9% originations, and you know, certainly, that would have been the originations were somewhat plumped up by the launch of the Triton. So tool storage is probably down more than that would indicate, but I do I don't know how that goes forward.

I think it's gonna take a while for customers to kinda accommodate. But as we saw in the pandemic, which is really I'm kinda talking about that with the with the CNI shock question. It's kinda like a pandemic event. Everybody got shocked.

I think the the, you know, the the technicians have been shocked for a while. I think sooner or later, nothing new happens, they start to accommodate. And they start to realize, well, you know, I'm worried, but nothing's really happened to me. You know, my wages keep going up, and I start to say I can take a few I can myself to more normal situations.

So I would expect that to get better as we go forward. Plus, I do think we're better at the pivot We're getting better and better and better and better and better. So that works for us. I don't know if the I don't know if I need the originations to come back right away.

But I do think that eventually people if nothing big happens, they start stabilize even more, and people start to come back with a rejection. But I'm not predicting anything like, for the next quarter. As you know, Luke, I'm gonna say this again because I said it at every third quarter. The third quarter is always squirrely.

Harder to predict than any because the SFC is during that quarter, and that creates a kind of turbulence that you can never predict. So we'll see how it goes. But I like the way things are going. I'll tell you that.

You can see it in the numbers. Maybe for a turn it back, Aldo, could you just give us maybe a feel for some of the key end market trends within Critical Industries and C and I. And it's mentioned that momentum was much better exiting the quarter relative to, you know, this more COVID like shock. Can you just give us a feel for, you know, where that run rate was directionally?

Relative to getting close to the plan?

Broadly speaking, Luke, April was much slower than what the full quarter turned out to be. So as I said, they've improved as quarter moved out. And we saw the biggest changes, I'd say, would be in the aviation and military-related non-defense sector, things of that nature. But general industry also started to improve.

So again, well down yet in the quarter. Started to see some signs of improvement.

Got it. I'll leave it there. Thank you.

The next question will come from Gary Prestopino with Barrington Research. Please go ahead.

Good morning, all.

Morning.

Did you call out what the FX impact on earnings per share was for the quarter? In your narrative?

I did not.

Would you like to know?

Yes. I would.

Okay. 6¢. Okay. 6¢ negative. Okay. Great. Thank you. Then a couple of questions here. The RSNI growth was pretty strong, and you mentioned something about our new Triton platform.

Yeah. Could you could you maybe elaborate on that? And, you know, what the price points are and what are the differences with this versus what you had in the market before?

Sure. Look. I Gary, I don't know if I can say the price price point on this. Yeah.

Okay. Let's say $4,500. Ballpark. Ballpark. $4,500. Might be I don't know how we can afford to sell it for that number, but okay. Around that number.

Know, it depends. There's a lot of factors. You know? What is what what's on promotion?

What isn't? But let's say know, 4,500 to 5,000, something like that. It's in the it's in it's in the middle of the intelligent diagnostic range. Right in below Zeus and above Apollo.

And the difference is is the differences are is that it's wireless rather than wired. And the big the big deal here is is that our wired units were you know, their hallmark was they were like lightning. You plug them in. You started them up, and they really rolled up.

This one comes up right away. So and it's wireless. So it gives you both the flexibility of wireless and the and the speed, you know, the the instant on of of of wired, and that's that's a cool thing. And then the then you have the other thing that we have a Zoom feature on the know, these things have two two channel scopes.

So what you do is you put the scope on a car and you watch a waveform here. But the thing is, sometimes the the the problems in the car are very intermittent, very quick. They only happen for a little while, and you can't really see them on the way to them quick. Carefully until you zoom right in and look at small glitches.

And the zoom feature allows you to freeze it and move it in. You know, the the waveform's a dynamic thing at first. So then you record it, freeze it, zoom in, and check catch the glitches. That's a big help.

And then it has it has a a a eight-hour battery life, which is pretty long and, you know, you get makes it quite quite usable. The other thing I think that's that's different is that's four times the memory. The four times memory means you can store a whole lot of stuff, you know, like a lot of waveforms, a lot of procedures in it, a lot of data from other things. And it helps a lot.

Technicians really like it. I, you know, I just was out with franchisees in Connecticut and in Atlanta. Having dinner with a bunch of these guys. And then, you know, they're all franchisees are pretty positive, and they love this one.

They love selling it. And the techs seem to like it too. So we feel pretty good about it. So pretty well for, you know, for the the launch look was baffle.

So we'll see how it goes. We like it, though. I mean, it's it's having an impact.

Yeah. That's good to hear. And then just lastly, in the C and I group, I think you called out that the international operations, you know, were sluggish. Did The US kinda mimic that You know, I'm not sure how many how much you do in US and C and I, but I wanna get an idea.

Yeah. C and I C and I roughly. For government work, Gary, C and I is fifty fifty. 50 in North America, 50 outside The United States. Mhmm.

You know? Europe, tops. Asia, you know, are well, you know, Asia we ourselves said, we're not importing anything from China. The thing is a 170 a 170% tariffs.

Remember when they were a 170%? We just said, no. So Asia is very, very discombobulated in this situation. Not to mention you got the you got some other markets disturbed, you know, like South Korea, they just arrested the old president, you know, and everybody's moaning.

And then in Thailand, they just declared the former the new prime minister a traitor. And took her out of office So things are pretty turbulent in Asia. We I was just there. And the markets are pretty bad.

You look at Europe, I mean, Europe is again a cross border position. They've got they've got GDP in UK was point 1%. GDP in Germany point 3%. GDP in Spain, point 5%.

Europe has got problems. I think, least for us, we're seeing that. And then in The United States, really, what happened is that that's like the, you know, European European businesses and the Asian business. A lion's share of which is in in in c and I.

Then you've got the industrial businesses. You know? Industrial's got pick and ship businesses, which quick, you know, it's off the shelf, like, little bit like the tools field. One then it's got project business, which is a big slug of their business.

And these things you think about Okay. Liberation day happens. We're gonna have tariffs. Well, the tariffs changed three times for China in the month of April.

And then and then nobody they come out with 46% for Vietnam. And then they say, oh, never mind. It's gonna go to 10% until July 9. And then July 9, they come out and say, well, it's 4020%, but we're not sure. Because the 20% is for is for direct you know, the standard stuff, and 40% of you have transshipment.

So people are sitting there saying, it's a very interesting phenomenon. It's a little bit like the pandemic, I would say. It's kinda it's kinda not congruent to the pandemic, but it's similar. You know, if you have projects and you're thinking about doing things, you're saying, I'm not gonna commit to very much.

Because I don't know where the world's gonna be. And I kinda have a feeling that there's a pretty close horizon, and it's gonna resolve itself. So that means that put people back, particularly in the early parts of the of the the quarter. You know?

And people just said, jeez, I don't wanna commit. I look like a fool if I make a mistake. And you saw some of that working through the working through the system. Especially in a project.

Now all of this our orders kept getting stronger. People just didn't pull the trigger for delivery. And so we like the order book. It's just that people have to figure out how they're gonna accommodate the tariffs, and people are gradually come as they did with the pandemic.

That's what happened to the pandemic. At first, people panicked. You know? Yeah.

Everything started to work out just so you can see in the pandemic. K. K. Okay.

You very much for that.

The next question will come from Christopher Glynn.

With Oppenheimer. Please go ahead.

Thanks. Yeah. A lot of a lot on that last topic, but just maybe a little follow-up. You know, description of upward motion through the quarter, seemed to center a little bit on critical industries in US project timing, but I think you said it really spanned APAC and Europe. So just wanted to clarify if that motion really spanned all those categories.

No. I no. What I was talking about maybe a little bit in Europe. You know?

Asia is kind of a different deal. Asia is gonna take a lot longer to deal with. Isaac. Because, you know, you got those just what I said.

I mean, you know, they got the political turbulences and a bunch different places. And you got China, which is a basket case. China's really screwed up. And so you got all that stuff in Asia.

And on top of which, you got the cross border flows, which everybody's trying to figure out what to do, including us. You know, we're not taking tariffs, but we gotta figure out what to do with our clients in China. You know, if we don't wanna use them in The United States. And we sell in Asia.

You know? So we gotta just you know, help them a little bit. But I don't think that gets just by the liberation day situation. Europe is more like that.

But I really was talking about mostly just in our last you know, discussion, really about the critical industries business and their project-based business. That's what I was talking about. When we talk about Chris, when we say that the that we exited the quarter stronger than when we entered, we kinda mean the tools group as well. You know, we mean and if I could do me the tools So we're we're actually talking about C and I and the tools group.

But at C and I, it's most pronounced. In the industrial business, which by the way, is the big Kahuna engine in the C and I business.

Perfect. Thanks. Very clear. And then just wondering about capital. You got a nice net cash position here. Any comments on state of the acquisition pipeline and update on types of focus that inorganic business development efforts are taking lately?

Sure. We got we got a we got a bunch of stuff looking at. I mean, you know, I think you can you know, it's no secret that we have a we have a pretty large landscape or or you know, a landscape of acquisitions that we look at every you know, constantly, And, you know, generally, there's not much to acquire around the tool group. Probably, you don't look so much at Asia these days because who the heck knows what's gonna happen there.

You know? And so you're talking about the expanding the repair shop owners and managers or the critical industry. Those are the areas you look in, more or less, And we're looking at, you know, several places. You know?

Sometimes as we peel the onion, it looks like, hey. These guys are only 20 or 30% off, and we don't like the other stuff. Sometimes And in this situation, of course, you wanna be pretty careful. You know?

Don't wanna acquire something and then wake up and figure out woah. You know, the tariffs aren't looking so good for these guys. You know? So you wanna be more careful in due diligence.

I'm not saying I'm not giving you any future view of that. That's just a little color. In this situation, I think, you might be able to get that bargain but you're worried about what you might buy. You know?

You wanna be very careful in due diligence. And we are. We take care of our money.

Great. And then, SOT. So sounds like the sentiment moved off the bottom, a little reconciliation in the mindsets. There. And escalating of your your pivot work going well. Just wanted to see if any other factors layered in, you know, what what sell in versus sell through and you know, was there any restock or maybe price related pull forward that came to bear?

I don't think there's any of that. Actually, our prices were pretty normal. You know, we might have had a little more pricing in Canada than normal. Maybe, you know, because of the situation there.

We can always price if we get if we have tariff problems and, you know, so but, generally, we're resistant to that stuff. You might see some of that in Canada, but and and Canada actually was okay in a quarter. So that wasn't afflicted. I don't think I don't I think you saw it.

I mean, I think the international business kinda mixed. And so that was flat. Think the big news is US up. And that was driven by the pivot.

The hand tools were pretty successful. And and and the diagnostics business is pretty successful. So those two things made made hay in the situation, and we like that idea. And I think you know, we felt you know, if you look at the structure of the quarter for the tools group, we we exited stronger That's complete it.

That's no prediction. I've already said that the third quarter is squirrelly. You know? But generally, I like the direction we're going there.

It seems like and and I think it's simple as this. We've been pivoting. We're getting better at it. But the but the uncertainty has kinda stabilized.

So if the uncertainty stabilizes, every month, we gain ground on it. With the pivot. Every month. Great.

Sure. Thanks for all that.

The next question will come from Scott Stember with Roth. Please go ahead.

Good morning, and thanks for taking my questions as well. Just to clarify, I guess there was a question about maybe selling versus sell through. If I thought I heard correctly. But could you talk about tools I know there's a lot of new products that are out, sell into the channel versus sell off the van in the quarter?

Yeah. Look. I think they're about the same. I think the sales the sales off the van were a little little bit lower.

You know, but that would be expected when you have the kinda you know, I've described to you exiting stronger than when you entered, So that would mean it takes time for stuff to get through the van and to so, therefore, you would have that kind of an effect naturally. Generally, we haven't seen turbulence We haven't seen in all this turbulence really much variation for you know, if you look at bigger periods. A quarter is a kind of blip in that kind of view. You know what I mean?

It depends on what's launched. When it's launched, when it hits our bands, and then when it you know? And so it's a lot of things like that. So I think they're pretty much in balance this time.

Yeah. As I said, the actual numbers are a little lower, but that would be natural expectation given how we've described how the quarter went.

Got it. And then you talked about some of these. Higher ticket items or less expensive higher ticket category. Sales that you're seeing. Were the Yeah. We're out I'm I'm running out of the experience. That's right. You was diagnostics, the leader, in tools in the quarter?

No. Hand tools was the leader.

Okay.

Hand tools was the leader. But hand tools are hand tools and that's why I spent so much time talking about hand tools because the hand tools are great. That's those pliers are great. The pull forged pliers.

Unbelievable. You know, the strength of those things. And Milwaukee is probably one of the only places in the world that can do that. So we really like that kind of thing.

And I see it doesn't mean much to you know, if you're like us, you know, like me anyway, who pushes a pencil all the time. But but it's a lot it's important to the techs, and they're they're liking some of the stuff we're bringing out. Now diagnostics did pretty well. Don't don't get me wrong.

The Triton was stupendous. But tool storage is down, you know, and stuff like that. We it it it every quarter, there's a new story about the products. I think, generally, though, the big thing is the overall number.

And I don't wanna, you know, I don't wanna pull off the call without reemphasizing what we think is the bellwether number. And that is 50.5% gross margin. Down only 10 basis points against 50 basis points of negative currency transaction. Think about that one for a minute.

And you see that, boy, that that just lays out what we did what we're doing. We're doing okay. We're winning the battle at the at the at the point of sale. And we're bought since sales are a little you know, aren't are flattish, still spending more because we wanna keep building our advantage in product and brand new people.

We're hiring a lot. Hired more engineers than ours and I. No kidding. Their margins are about 12 of their past 13 quarters.

And just last question on tariffs. Nice job on essentially mitigating everything in the quarter. But could you dimensionalize what the headwind was? And as more tariffs start flowing through, you know, how much bigger that can get in the back half of the year?

I'm not you you know, I swore I was not gonna do that. Because I think no. I'm not gonna do that. It's you know, it's hard for me.

You know, we can make changes every day and mitigate. And the thing is every day, something new comes up. I got I got somebody who's got who every day writes a paper on what comes out of Washington, and we have to review it. Because the tariffs are always changing.

Your guess is as good as mine. So we have we have to move with alacrity against it. So it's impossible to predict. And all I can tell you is I like our position versus any of that stuff.

Our position is pretty good. We make in the markets where we sell. Now we do have some exposures. We got to resist We know how to make everything almost everywhere.

Got it.

That's all I have. Thanks again.

Yep.

The next question will come from David MacGregor. With Longbow Research. Please go ahead.

Hey. Good morning, everyone. Congrats on the progress, Nick.

Thanks. Hey. Good morning.

I guess just on the C and I business, you talked about the project delays and and how the led to some order backlog. Just talk about the timing of of that realizations there. Are those projects that now that people maybe are feeling a little don't know how much more confident, but maybe a little more confident that we see those projects fulfill here in the second half, or is this just kind of an indefinite push out?

No. No. Look. I look.

I think this I think that, you know, it's hard to get everything in, all the nuances. But in reality, I was talking about delays. You know, people didn't pull trigger. And I'm also talking about the orders impacting us.

Kept going and doing us order. So they didn't pull back on ordering so much as they pulled, you know, on delays and projects we expect to go. I still I don't know about that. I think it's I do think things we exited the business stronger than when we entered.

And that's an important factor. It's hard for me to predict the structure or or, I guess, the the the slope of that curve You know, it's hard for me to but what happens is what happens in the pandemic I think this is very similar, You know, thinking people start to look at it, and they start to be comfortable with the environment. And they start to figure out how to just deal with it. It's sorta like it's sorta like all of us in business.

Like, you know, you know, things start to happen and you you know, the waves are going up and down, and you figure out how to navigate the waves after a while. First, you get seasick, and then you get used to it, and you figure out how to do it. And so I think that's what's gonna happen. I think we're sanguine about it.

But I can't predict. You know, anything like that. I do think that business is strong, though. Anyway.

Yeah. Even sounds like it. The numbers this quarter. Let me ask you about the tools business. You know?

Yeah. Obviously been a lot of moving parts. There's a lot of tumult in that space. But there was a time when you thought that tools was a 4% grower.

A long-term basis. Is that a number that you're starting to feel a little comfortable with is achievable on a sustained basis, or is that still something.

I think if you look at our numbers over twenty years, you'll find that the kind of what we've done, you know, and the profitability. But the profitability is going up regularly. That's really been the secret to snap on. We've been growing in the range we said.

Over quite a long period of time. You know, there's ups and downs. And our profitability is moving upwards. And so I do think the tools business sees that kind of thing.

This was kind of a little unusual because you had this uncertainty go. I think there was good reasons for it, though, if you looked at the environment, particularly now, And so I'm pretty confident about the tool system. Business. I think you know, when I talk to the franchisees, they seem pretty When I talk to the customers, they seem to like our product.

You know? And I do think our product is stronger than ever so I feel okay. I think you know, we have to keep executing. We have to keep working.

Think we're good at it, but we have to keep getting better at it. And Yep. But I have no doubt that it's gonna go upwards.

Let me just go back to a previous question about you know, cash and capital allocation, and you talked about the M and A funnel look good. But historically, you've been I mean, you've done smaller transactions. You've you've snap on and stayed away from large acquisitions. I mean, you've got a net cash balance sheet, strong free cash flow prospects, maybe $1,000,000,000 annually.

You know, you just completed a large capacity build-out program. You're not a particularly large share repurchase, sir, although maybe that changes here going forward. Would you consider a special dividend or a tender offer for shares, or is there a possibility of a few larger acquisitions? How do put the cash to work, Nick?

Look. I think well, I still think we're not in a certain environment. And so I mind having cash. You know, I don't mind having it.

I mean, I do think I have confidence in the future, but I still don't and I do believe. I know you we do believe we, at one of these points, will find a big acquisition. We just think it's a matter of time. Now I've been here a long time.

We haven't found one because everything we looked at been a little bit flawed, and we but we are not afraid to acquire anything big. Our management team is quite capable. The only thing is I'm telling you, we won't acquire anything that's transformative. We'll acquire things that's consistent with our coherent growth model.

And we do think there are things out there as they became available. Just haven't been available.

Yeah.

So I don't I don't see anything. Now having said that, we always review on a periodic basis and, you know, more than once a year, you know, regularly. We review the capital, you know, allegation process. But right now, I don't see us contemplating any of those things. But we'll see. You never know.

Good. That's it for me. Thanks very much.

Okay.

The next question will come from Bret Jordan with Jefferies. Please go ahead.

Morning. On the collision segment, I think you sort of called out that it remains weak. Is that a structural problem? Or is that a cyclical problem? Is there lower demand for repair with ADAS?

No. Look. I don't know. You know?

Look. I'm not sure. I think so that collision might come under the group of, you know, a lot of it is the you know, as you're mister collision, you know this probably better than I do. You know?

But the thing is you got a lot of those big multi-store operators. That have been building up And our view of the world is they got a little spooked lately. And for maybe a variety of reasons, they're not investing as much as they used to. That's our view of the world.

And so that may be true or not, but that's what that's what our grassroots kinda says. You know? And so we kinda believe that's a factor. I think that's in collision.

That's the big factor. I think that's changing that collision, making it a little more tepid. Now it has been incandescent. A long time as you probably know.

There was a lot of movement, and maybe you're talking about people not so much spooked. They're saying, okay. I'm gonna I'm gonna consolidate. I'm gonna, you know, consolidate my gains for a while, and then start to move on.

I don't know. We'll see what happens.

Okay. And then a question, I guess, as far as the franchise event outlook. I mean, obviously, slightly harder comparison on Q3 against a pretty strong franchise event last year. You know, any color as far as, like, what the attendance is looking like? I mean, it's coming up in a month or so.

I just need to I think the I think the I don't know. You know? I look. This is our two hundred and fiftieth anniversary.

So two yeah. The hundred and fifth anniversary. Two hundred what am I talking about? Hundred and fifth.

And I think maybe it could be a little bit bigger. I don't know. We'll see what happens. We kind of are planning for it to be slightly bigger.

But it is it is it is last year was in Orlando, and year, it's in Orlando for a number of reasons. So you never know how that's gonna go over, but we expect a pretty robust you know, as robust as last year. Looking now. You never know, Brett, until the last few weeks because a lot of the lot of the votes come in at the last few weeks.

It's like waiting for, you know, like, an annual meeting. A lot of the votes come in in the last day. So that kind of thing. But I do think it'll be pretty robust.

Now having said that, though, the SFC you know, it's great. You know, you like that, but it's always enthusiastic. Can't go away from the SFC without feeling good about Snap-on. But the or it's only orders.

You know? And so when whatever happens at the SFC, you gotta realize it's only orders. And therefore, it has to play out real and real sales. You know, getting high orders are better than getting a stick in the, you know, in the odd wood a get a sharp stick in the eye.

But they're not definitive. They're not fully definitive. They're just directional.

Alright. Great. Thank you. Appreciate it.

Okay.

This concludes our question and answer session. I would like to turn the conference back over to Ms. Sara Verbsky for any closing remarks. Please go ahead.

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

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