Good morning and welcome to the Snap-on Incorporated 2024 Third Quarter Results Conference Call. All participants will be in listen-only mode. After today's remarks, there will be an opportunity to ask questions. 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.

Thank you, Gary, and good morning everyone. We appreciate you joining us today as we review Snap-on's third 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 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 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 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?

Thanks, Sara. Good morning everyone. As usual, I'll start with the highlights of our third quarter. I'll provide my perspectives on the results, on our markets, and on our path ahead. After that, Aldo will give you a detailed review of the financials. My perspective is that I am encouraged and we believe our third quarter was encouraging, another period of broad profitability growth and significant forward progress, product and process success, and clear traction in our Tools Group pivot to quick paybacks. Of course, the quarter again had its challenges, ongoing macro pressures creating obstacles of uncertainty, just like we've encountered before. But in the end, we adjusted, withstood the turbulence, took advantage of the opportunities, and drove another strong earnings performance. And all of that is written clearly across the results. Here they are. Third quarter sales of $1,147 million were slightly down from the $1,159.3 million recorded last year. On an organic basis, excluding $200,000 in unfavorable foreign currency translation and $7.2 million from acquisitions, our organic sales were lower by 1.7%. But the OpCo operating income was up, and the OI margin was 22%, up 80 basis points, setting a new benchmark for our third quarters. For financial services, the OI grew to $71.7 million, that's up from the $69.4 million of 2023, a number that when combined with our OpCo result, raised our consolidated OI margin to 26%, up 90 basis points from last year's 25.1%. And EPS it was $4.70, a nice gain from last year's $4.51. So those are the overall results, marked by operating capability, structural balance, and consistent resilience prevailing against significant headwinds. Now, let's take a view of the market. During the third quarter, automotive repair remained robust. It continued to expand in complexity. New models entered the market, unveiling a rollout of new drivetrains, motor configurations, and high-tech electrical systems that control a neural network of sensors woven together that enable driver-assisted vehicle autonomy, all of it housed in modern chassis, fashioned out of space age materials. This sophisticated advancement combined with an aging car park, now averages 12.6 years to make fixing vehicles even more challenging for Snap-on. This is music to your ears and the hits just keep on coming, creating opportunities for years to come. Let's talk about organizations. The OEMs, the dealerships, the independent garages, and the segment that primarily focuses on infrastructure-type investments, recovering things like renovating bays and upgrading repair equipment, meeting the challenges of new vehicle models and expanding shop capacities to match the rise in repair work, driven by the ongoing increase in vehicle complexity. New lifts to support the extra weight of battery systems, sophisticated undercar equipment to calibrate the driver assist systems that enable vehicle automation, and more powerful software suites for managing parts rooms, service space, and customer interfaces, enhanced vehicle communication devices to interact with the more complex designs, and more powerful repair information databases to read, to diagnose, and to fix the vehicles of the now and of the future. Our repair information group or RS&I thrives in this world of complexity, serving repair shop owners and managers, delivering solutions that make the full repair path much easier, paving the way forward with innovative dealership management systems, proprietary one-of-a-kind intelligent diagnostics platforms, and the full array of capable shop equipment. Now, the opportunities for the garages is strong, but uncertain interest rates, rumors of tax changes, and worries over the elections are all weighing on investment decisions, creating a mixed landscape across the market, but the overall outlook still remains quite positive. We believe that Snap-on and RS&I are poised to participate fully in the abundant opportunities. Now, let's shift to the technician market. These are the folks who decipher the data, touch the screen, diagnose the problems, twirl the wrenches, and wheel their extraordinary skills to execute the repair. It's where our van network applies its trade. In that regard, the third quarter is always a great time for me because it's when we hold our annual Snap-on Franchisee Conference, or SFC. It's a gathering of men and women who drive the vans and call on hundreds of thousands of techs every week. It's an unmatched connection to the world of vehicle repair. Again, this year, I had extended conversations with dozens and dozens of our franchisees and each encounter resonated with enthusiasm. We say Snap-on prevails in turbulence and proceeds with confidence and the franchisees know it's true. Now, with that said, the macro environment is still weighing on our technician customers with considerable uncertainty, driven by the election and its perceived impact, fears of ongoing inflation, border pressure, and the specter of prolonged wars. The shops are full, tech wages are up, the hours are expanding, and the demand for tech continues. They have cash, but they're still confidence poor. The bad news they get every day for breakfast is weighing on them. They’re hesitant on the future and as such, they're reluctant on big ticket items with longer paybacks. So, to accommodate, the Tools Group continues to pivot, focusing on shorter payback items to match the technicians' current preferences. The third quarter results confirm that it's working. We believe the automotive repair market is robust. Current uncertainty notwithstanding, it's a great place to operate. Now, let's turn to the critical industries, where the penalty for failure is high. This is where our commercial and industrial group or C&I makes its living. It's challenging, rugged environments like oil and gas platforms, mining sites, and battlefields, but it also includes sensitive and sophisticated atmospheres needed to manufacture computer chips, build airplanes, and launch rockets. The customers in this segment are organizations big and small, and they're more influenced by the data than the text, interest rates, GDP, and industry demands. These segments are pretty positive. We see it in the results, growth in aviation, in defense, in general industries, and sectors that need our precision torque device to execute and document accuracy, enabled by our custom kits that meet the specific needs of tasks improving quality, productivity, and safety. This is also the segment where our largest international presence is, and consequently, it's the segment with the headwinds of geopolitical turbulence. In that regard, Europe continues to vary region-by-region. The South remains positive, but several countries, particularly in the North, are dealing with difficulty in some cases, technical recessions. In Asia, it's also mixed. China is still recovering from the pandemic and the effects of the extended lockdowns. At the same time, Korea and Japan are resilient. So, there are geographic challenges in the critical industries, but overall, this market is positive. The potential is considerable, and we believe we are well-positioned to capitalize on these possibilities. Well, those are the markets. In summary, automotive repair is mixed in the now, but broad potential for the future. And the critical industries are still robust and rich with opportunities. Now, let's talk about the operating groups. In C&I, sales of $365.7 million compared to $366.4 million registered last year. Sales excluding $7.3 million of acquisition-related volume, the organic sales were down by 2.1%. From an earnings perspective, however, C&I OI of $61 million improved by $2.9 million or 5% over last year, and the OI margin was 16.7%, up 80 basis points, equaling the record high established in the last quarter. The major contributor was our industrial division, continuing its upward trajectory and strong profitability, wielding the capacity provided by its new kitting center in Kenosha and meeting the rising demand for customized solutions along the way. In addition to our investments in the kitting center, our acquisition of Mountz last year is rolling into its 12th month and it's been a valuable contributor in meeting the needs of our customers for small precision torque. Torque continues to be significant with critical industry customers. To meet this need, we packaged our existing medium and heavy-duty torque products with Mountz's lighter offerings, giving us a wide spectrum of clamping forces essential to the critical industry from oil and gas to aviation to defense. We're capitalizing on that opportunity and the quarter showed it. Our specialty torque business rose significantly both in volume and in profitability. We also continued adding to our portfolio of professional cordless tools, engineered products, aligned with the work performed and the expectations of techs doing repairs. For serious people at work, new products can add great value, and our quarter was marked by that effect. For working on large equipment and over-the-road trucks, we unveiled a CT9175 3.75-inch 18-volt impact, not for the faint of heart. This unit delivers 1,550 foot-pounds of bolt breakaway torque. It's ideal for the most challenging jobs. The rugged lightweight housing shakes off harsh environments. The ergonomic design reduces stress and fatigue, pretty important when you're wielding 1,550 foot-pounds. This 9175 monster has a great feature set to boot, like LED spotlights, multiple power settings, and a variable speed trigger to just apply the right torque to the job. It's a great tool. Just what you'd expect from Snap-on, powerful application, easy to use, and very efficient. It's a tool that techs increasingly want in their arsenal when they're fighting the toughest jobs. The 9175, it's a great productivity enhancer and the technicians have noticed. One last thought about the results. C&I kept investing in the quarter, maintaining and expanding our advantage in products, brands, and people. Operating expenses were 140 basis points of sales higher than last year. But with the benefits of rapid continuous improvement, or RCI, the value of new products, gross margins rose by 220 basis points and the OI margin, despite the spending, was up 80 basis points, higher spending and higher profits without additional scale. That's C&I, innovative products, custom solutions, precision instruments, all combined to reach customers in critical industries and extend the Snap-on brand out of the garage with momentum and profitability. Now, for the Tools Group. Sales in the third quarter of $500.5 million included an organic decrease of 3.1%, with a U.S. decrease that was not much different. The OI margin in the period was 21.6%, down 40 basis points from last year due to the lower volume. With that said, gross margins remained strong, improving 100 basis points, driven by new products, RCI, and manufacturing efficiencies. During the period, our team maintained its focus on product development, designing solutions that make work easier and provide customers with quick paybacks. That pivot is taking hold, closing the deficit overall in the U.S. to less than half it was in the second quarter. That trend was reinforced in the period by sales being $18.5 million higher than the second quarter. With summer vacation and SFC breaks, we haven't seen the Tools Group up sequentially in the third quarter for some time. We believe it's a sign of considerable momentum. The Tools Group is coming back. Beyond the numbers, we held our annual SFC in August this year in Orlando with attendance reaching 9,000 franchisees, guests, and Snap-on associates. This tool show spanned over three football fields showcasing the latest in product innovation, more than 4,500 SKUs strong. The weekend was packed with training sessions purposely designed to grow each franchisee's business and expand their already substantial product knowledge. Among those seminars was an in-depth review of our intelligent diagnostic portfolio with instructors connected directly to the vehicles, communicating with the cars in real-time and clearly demonstrating our industry-leading advantage. It attracted a lot of attention. We celebrated Saturday night by transporting the entire crew in what could be described as an armada of buses to SeaWorld for a night of roller coasters, aquatic shows, and a lot of fun. It was another memorable event, but principally, it serves as a testament to the unique bond that our franchisees hold with the Snap-on team. I believe anyone attending would affirm that the franchisees left reassured on the power of our operation, enthusiastic about their way forward with our enterprise, and convinced that Snap-on really does prevail in difficulty and proceed with confidence. The product booths at this year's event were pretty busy, especially near the Cartway to Heaven. It was an eye-catching and colorful wall of mobile tool carts. The model that stole the show was our brand-new KRSC 2460 flip-top roll cart, a unit that offers Snap-on tool storage in a quick payback form, just what techs want in today's world. That's why it was so popular. The 2460 can hold a significant breadth of sockets, wrenches, and power tools in a variety of drawers that range from 2-inch to 3-inch to 5-inch configurations. The ultra-deep top compartment is designed with five AC outlets and two USB ports to ensure that electrical devices are charged and at-the-ready for any use at any time. The launch was a significant success and it provides even more testimony that the Tools Group traction to pivoting to shorter payback items is working. Also on the shop floor were products highlighting Snap-on's customer connection. We stand next to mechanics, observing work, experiencing the complexity of vehicle repair, and we use those insights gained to design innovations that make work easier. One such custom solution available at the SFC was our new S8400 half-inch drive axle spindle nut socket. It's manufactured right here in the U.S., at our Elkmont, Alabama plant. Since 2022, GM 3500 heavy-duty pickups have used a unique fastener that's very deep into the axle hub. It's a very difficult and time-consuming operation to extract it with standard tooling. So, our new specially designed socket reaches in, links precisely with the embedded fastener, and makes the removal or installation safe, quick, and effortless. Each vehicle is unique and a range of different repairs are needed as they age. This is the mother load for a toolmaker and Snap-on's customer connection positions our team to have just the device to match the task. It's a great advantage that was on display at the SFC and it was reflected in our third quarter results. The Tools Group is pivoting to quick paybacks, launching differentiating new products, and summoning resilience against headwinds. Now, for RS&I. Sales of $422.7 million in the third quarter represented an organic decline of 1.9%. Lower sales in undercar equipment and reduced activity with OEM dealerships were partially offset by higher sales in diagnostics and information products for independent shops. In effect, declines in hardware balanced by gains in software. OI for RS&I was $107.3 million, up 2.3% compared to last year, despite the lower sales and the OI margin of 25.4%, one of the group's highest for some time, was up 110 basis points from 2023. All of it was authored by big product and RCI-driven gains in gross margins, partially offset by spending in operating expenses. Gross margin is up, operating expenses balancing some of it, but the investment was there to maintain and extend our advantages and so we did. During the quarter, RS&I launched its latest addition to our intelligent diagnostic lineup, the APOLLO+. This is a new ergonomically designed handheld that offers a 2-second boot up, the fastest in the industry, and a large 10-inch touchscreen for improved visibility and navigation. Most importantly, the platform is powered by our proprietary intelligent diagnostic software with almost 3 billion data records and over 400 billion unique diagnostic events, all organized to help technicians diagnose and fix vehicles much faster. It was introduced in mid-August, toward the end of the quarter, and it represents a tech’s most economical way to wield the power of intelligent diagnostics. It already has the customers' attention. Our on-the-street feedback says the new sophisticated platform with a quick payback is a real hit and we believe it has a great future. We're encouraged by the strength of our handheld diagnostics and the other unique solutions we provide, and that confidence is reinforced by outside experts. Our SOLUS handheld was eligible for the 2024 awards and it was cited by Motor Magazine as one of the top of the 2024 Top 20 Tools. It was also recognized by Power Tools and Equipment News for one of its 2024 People's Choice Awards, that’s a distinction based on the endorsements from real technicians, actual users from all across the nation. RS&I also received P10 recognitions for its Collision Repair package, its on-truck brake-wave, heavy-duty diagnostic software, and its M1, Mitchell 1 Shop Management System. Collectively this year, across all our operations, Snap-on won 20 such awards. Product is a Snap-on advantage, and everybody knows it. We're confident in the strength of RS&I and we'll keep driving to expand its position with repair shop owners and managers, making work easier, enhancing productivity, and providing garages with the means to match the ever-growing challenges of modern vehicle repair. Those are the third quarter results. Tools Group, demonstrating sequential improvement, pivoting effectively to meet customer preferences. C&I and RS&I, innovative new products and operating efficiencies, managing the headwinds, producing benchmark OI margins. For the overall corporation, sales organically down 1.7%, but OpCo OI up 2.9%. OpCo OI margin of 22%, up 80 basis points; and EPS of $4.70, up 4.2%, rising over every comparison, all achieved against the wins. It was another encouraging quarter. Now, I'll turn the call over to Aldo. Aldo?

Thanks, Nick. Our consolidated operating results are summarized on Slide 6. Net sales of $1,147 million in the quarter compared to $1,159.3 million last year, reflecting a 1.7% organic sales decline and $300,000 of unfavorable foreign currency translation, partially offset by $7.2 million of acquisition-related sales. Despite the ongoing uncertainties of the current environment, overall sales activity in the quarter can be characterized as stable. While our franchise van channel revenues continue to be tempered by technician confidence, the Tools Group generated higher sales sequentially versus last quarter. Generally, the third quarter reflects lower sales dollar activity as compared to the second quarter. Consolidated gross margin improved 130 basis points to 51.2% from 49.9% last year, reflecting increased sales in higher gross margin businesses, benefits from the company's RCI initiatives, and lower material and other costs. Operating expenses as a percentage of net sales rose 50 basis points to 29.2% from 28.7% in 2023, primarily due to the lower sales volumes. Operating earnings before financial services of $252.4 million in the quarter compared to $245.2 million in 2023. As a percentage of net sales, operating margin before financial services of 22% represented an improvement of 80 basis points from the 21.2% reported last year. Financial services' revenues of $100.4 million in the third quarter of 2024 compared to $94.9 million last year, while operating earnings of $71.7 million compared to $69.4 million in 2023. Consolidated operating earnings of $324.1 million compared to $314.6 million last year. As a percentage of revenues, the operating earnings margin increased 90 basis points to 26% from 25.1% in 2023. Our third quarter effective income tax rate of 22.9% compared to 22.6% last year. Net earnings of $251.1 million compared to $243.1 million in 2023 and net earnings per diluted share of $4.70 in the quarter compared to $4.51 per diluted share last year, an increase of 4.2%. Now, let's turn to our segment results for the quarter, starting with C&I on Slide 7. Sales of $365.7 million compared to $366.4 million last year, reflecting a 2.1% organic sales decline, partially offset by $7.2 million of acquisition-related sales. The organic decrease is primarily due to a double-digit reduction in intersegment sales of power tools and a mid-single-digit decline in the segment's European-based hand tool businesses. These were partially offset by a gain in sales to customers in critical industries, including a high single-digit increase in specialty torque. With respect to critical industries, in addition to higher torque product sales, defense and aviation-related activity was strong, but it was somewhat offset by declines in the natural resources sector. Gross margin improved 220 basis points to 41.2% in the third quarter from 39% in 2023. This was largely due to the increased sales volume and higher gross margin in critical industry sectors, lower material and other costs, savings from RCI initiatives, and a 50 basis point benefit from acquisitions. These improvements were partially offset by 30 basis points of unfavorable foreign currency effects. Operating expenses as a percentage of sales rose 140 basis points to 24.5% in the quarter from 23.1% in 2023, primarily due to investments in personnel and other costs and a 50 basis point impact from acquisitions. Operating earnings for the C&I segment of $61 million compared to $58.1 million last year. The operating margin improved 80 basis points to 16.7% from 15.9% in 2023. Turning now to Slide 8. Sales in the Snap-on Tools Group of $500.5 million compared to $515.4 million a year ago, reflecting a 3.1% organic sales decline and $900,000 of favorable foreign currency translation. The organic decrease reflects a mid-single-digit decline in our U.S. business, partially offset by a low single-digit gain in our international operations. That being said, it's meaningful to highlight that sales in the historically lower third quarter period are higher than the $482 million recorded in the second quarter of this year, representing a sequential increase of 3.8%. We believe this, as well as the more modest year-over-year sales decline in the U.S. van network in the third quarter than in previous quarters, favorably demonstrates the resilience of this business. Gross margin improved 100 basis points to 47.3% in the quarter from 46.3% last year, primarily due to lower material and other costs and benefits from RCI initiatives. Operating expenses as a percentage of sales rose 140 basis points to 25.7% in the quarter from 24.3% in 2023, largely due to the lower sales volume. Operating earnings for the Snap-on Tools Group of $108.3 million compared to $113.4 million last year. The operating margin of 21.6% compared to 22% in 2023. Turning to the RS&I Group shown on Slide 9. Sales of $422.7 million compared to $431.8 million in 2023, reflecting a 1.9% organic sales decline and $900,000 of unfavorable foreign currency translation. The organic decrease includes a mid-single-digit decline in the sales of undercar equipment and a low single-digit reduction in activity with OEM dealerships, where we often see variability in essential tool programs from period to period. These decreases were partially offset by a low single-digit gain in sales of diagnostic and information products to independent repair shop owners and managers. Gross margin improved 190 basis points to 47.4% from 45.5% last year, primarily reflecting increased sales of higher gross margin products. Operating expenses as a percentage of sales rose 80 basis points to 22% from 21.2% in 2023, largely due to lower sales volumes and increased personnel and other costs. Operating earnings for the RS&I Group of $107.3 million compared to $104.9 million last year. The operating margin improved 110 basis points to 25.4% from the 24.3% reported last year. Now, turning to Slide 10. Revenue from financial services increased $5.5 million or 5.8% to $100.4 million from $94.9 million last year, primarily reflecting the growth of the loan portfolio. Financial services operating earnings of $71.7 million compared to $69.4 million in 2023. Financial services expenses were up $3.2 million from 2023 levels, including $2.4 million of higher provisions for credit losses. Sequentially, the provisions for credit losses were lower by $1.6 million. In the third quarters of both 2024 and 2023, the average yield on finance receivables was 17.7%. In the third quarters of 2024 and 2023, the average yield on contract receivables was 9.1% and 8.8%, respectively. Total loan originations of $288 million in the third quarter represented a decrease of $17.2 million or 5.6% from 2023 levels, reflecting a 6.7% decline in extended credit originations and a 1.3% decrease in originations of contract receivables. The decrease in extended credit originations mostly reflects lower sales of big-ticket items. Geographically, extended credit originations were consistent with the sales activity in the Tools Group with the decline in the U.S. only partially offset by growth in originations internationally. 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 1.9% is up 40 basis points from the third quarter of 2023. Trailing 12-month net losses for the overall extended credit portfolio of $62.3 million represented 3.11% of outstandings at quarter end. While delinquencies and net losses are trending upward, we believe that these portfolio performance metrics remain relatively balanced considering the current environment. Now, turning to Slide 12. Cash provided by operating activities of $274.2 million in the quarter represented 106% of net earnings and compared to $285.4 million last year. The decrease in cash flow compared to the third quarter of 2023 primarily reflects increases in working investment, which were partially offset by higher net earnings. Net cash used by investing activities of $40.5 million mostly reflected net additions to finance receivables of $20.6 million and capital expenditures of $20.4 million. Net cash used by financing activities of $156.2 million included cash dividends of $97.9 million and the repurchase of 215,000 shares of common stock for $59.9 million under our existing share repurchase programs. As of quarter end, we had remaining availability to repurchase up to an additional $471.5 million of common stock under our existing authorizations, including under the $500 million authorization recently approved by the Board of Directors in August of this year. Turning to Slide 13. Trade and other accounts receivable increased $5.1 million from 2023 year-end. Days sales outstanding of 61 days compared to 60 days at year-end 2023. Inventories decreased $10.1 million from 2023 year-end. On a trailing 12-month basis, inventory turns of 2.3 remained unchanged from year-end. Our quarter-end cash position of $1,313.3 million compared to $1,1.5 million at year-end 2023. In addition to cash and expected cash flow from operations, we have more than $900 million available under our credit facilities. As 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 third-quarter performance. I'll now briefly review a few outlook items for 2024. For the full year, we expect that capital expenditures will be approximately $100 million and we currently anticipate that our full year 2024 effective income tax rate will be in the range of 22% to 23%. Finally, with respect to corporate costs, we would expect expenses in the upcoming fourth quarter to be more in line with those incurred in the third quarter of this year as the fourth quarter of 2023 included some benefit for the recovery of costs associated with a legal matter, which will not repeat. I'll now turn the call back to Nick for his closing thoughts.

Well, thanks, Aldo. That's our quarter, resilience against the turbulence. We believe the period demonstrated that with great clarity. Sales attenuated, but great products solving critical tasks, material savings, and RCI drove strong and substantial gains in gross margins, strong enough that we're able to keep investing in our product, brand, and our people, maintaining and building them for the opportunities to come, and still increase OI margins significantly. All of that was authored by the ongoing characteristics of our Snap-on Enterprise. Businesses that are strategically positioned for advantage for establishing and maintaining ongoing connections to the customers, processes embedded in Snap-on value creation that really do deliver progress every day. And a very capable team that's committed to our enterprise, greatly experienced and battle-tested and is well able to consistently marshal advantage to drive positive outcomes and you see that all across the corporation. C&I sales down low single-digits for profits up, OI margin 16.7%, up 80 basis points. Gross margins up 220 basis points, gains from wielding customization in the critical industries. The Tools Group is meeting the challenges of the day, executing the pivot to quick payback items, closing the sales gap and displaying momentum. Sales down low single-digits, but OI margin is 21.6%, down 40 basis points, gross margins up 100 basis points. RS&I, wielding its advantage with software, sales down low single-digits, but profits up and OI margins of 25.4%, up 110 basis points, gross margins up 190 basis points and it all came together as a corporation. Sales attenuated lower by 1.7% organically, but OI rising from last year. OI margins reaching 22%, up 80 basis points, gross margins up triple-digit basis points all across the corporation and an EPS of $4.70, up over every comparison. It was another encouraging quarter. We believe that propelled by our decisive advantage in our product, brand, and our people, all maintained and strengthened even in the turbulence, Snap-on will continue its momentum, so clearly demonstrated in the quarter and extend our trend of positive performance well on through the days and the years to come. Now, before I turn the call over to the operator, I want to speak directly to our franchisees and associates. As always, I know many of you are listening. Our quarter demonstrates that Snap-on does indeed prevail in turbulence. Once again, you are the creators of that result, hard-won. For your achievements in authoring our success, you have my congratulations. For the skill, energy, and experience you bring to bear every day. On behalf of our team, you have my admiration and for your unshakable confidence in and dedication to the future of our enterprise, you have my thanks. Now, I'll turn the call over to the operator.

We will now begin the question-and-answer session. Our first question is from Christopher Glynn with Oppenheimer. Please go ahead.

Thanks. Good morning Nick, Aldo, and Sara.

Good morning, Chris.

Good morning. I wanted to dive into the kind of seasonal strength at SOT. Does that feel like kind of a reset baseline for normal seasonal patterns from here? We usually have a fourth quarter lift or maybe that gets into what the sell-in and sell-through was in the third quarter too, and that needs to be tested on the sell-through in the current quarter?

The sell-through has not been favorable for some time, with sales from the van slightly exceeding sales to the van. In this quarter, however, the situation was slightly reversed, and sales to the van improved. The third quarter is challenging to forecast and often unpredictable. If it weren't for the third quarter, the outlook would seem clearer, but the Tools Group performed better this quarter. It has been quite some time since we saw a third quarter surpass the second quarter, except for the one during COVID when we experienced a V-shaped recovery. Historically, it’s rare to see this trend. This reflects the overall group and the U.S. market, suggesting some positive momentum. The key question is whether this momentum can be sustained, and we believe it can. We appreciate their products, and it's encouraging that this has positively impacted profitability by 100 basis points. There’s been some volume impact, but the 100 basis points of gross margin improvement comes from excellent new products and manufacturing efficiencies stemming from new, more productive expansions at major plants in the U.S. We are optimistic about progress, although we do not provide guidance. However, I believe we have strong prospects moving forward for the Tools segment.

Sounds great. And then just switching on RS&I. It's been a very sturdy run rate. Third quarter, a bit of a step down, historically, not much routine seasonality, though the third quarter last year also kind of deviated a little lower versus the way the business had been trending. So, curious if you can offer any insights around that? Maybe does it feel like the equipment side is entering an interim pause after some steady customers recapitalizing?

I think the key point I made earlier is quite straightforward: hardware is down, while software is up. The hardware aspect relates to our equipment, which experienced some declines that can be seasonal. I wouldn’t put too much weight on that, but there was slight pressure in the third quarter related to vacations impacting operations. Additionally, the OEM business hit a plateau this quarter, but we don’t expect this trend to persist; it’s just a fluctuation, and we happened to face a downturn this quarter. On a positive note, our software businesses, particularly in diagnostics and Mitchell, are performing well, especially for independent repair shop owners and managers, and these segments are profitable. In the Tools Group, the software linked to diagnostics is thriving as we continue to follow hardware launches, which is reflecting strong performance and contributing positively to profitability across the company. I feel optimistic about RS&I and am not overly concerned. If given the choice between trading off high-margin software businesses and experiencing a bit of turbulence in hardware, I would choose the software side.

Thank you, Nick.

Good morning everyone. Nick, in your comments, you mentioned the impact of the pivot in the Tools Group on the quarter, noting a sequential increase of $18 million. Could you clarify if the majority of that increase was due to the changes in sales?

Hand tools were the strongest category this quarter. The shift is evident when you look at the numbers, although I prefer not to analyze them too closely as they can be a bit inconsistent from quarter to quarter. However, hand tools accounted for a significant portion of Tools Group sales to franchisees this quarter compared to the entire period since the pandemic. This is a clear indication of the shift we aimed for, as it aligns with what customers want to buy, which has positively influenced the situation and improved margins.

Is it safe to say that a lot of this was due to new products coming into the market that you introduced?

I believe that's correct, and we also had promotions. We showcased 4,500 products at the Tool Show at the SFC, with over 500 being new in some capacity. While not all of them were groundbreaking, those 500 represented offerings that franchisees could present to customers as something different. This qualifies as new and provides a selling point, which contributed to our performance. A significant portion of this was in that area. However, promotions can also enhance the appeal of hand tools if done effectively. For instance, offering a promotion where customers buy a set of hand tools and receive a dinner with Aldo Pagliari can drive sales significantly.

I'll remember that.

The last question is about your torque products in the Commercial and Industrial sector over the past few quarters. Is there a shift in the market that is leaning more towards specialty torque? I know you have developed products and made some acquisitions in this area. Could you elaborate on what kind of long-term factors are driving this trend?

I can answer that in asking you a question. Can you say the word Boeing?

Yes.

I think people are increasingly realizing that the processes within critical industries are becoming more complex, which necessitates a higher level of precision than in the past. Therefore, we require more precise tools, such as torque wrenches, to enhance our operations. The accuracy and range of these tools are crucial. Additionally, there's a desire for accountability in case something goes wrong; everyone wants to ensure that they used the right products and performed their tasks correctly. Many of our products connect to a central factory system, recording and documenting that the fasteners are applied accurately, which aids in driving efficiency. The ability to execute tasks with precision and ease on the production line, along with proper documentation, is helping to increase the demand for torque products. This segment experienced growth in both profits and sales this quarter. We are optimistic about this business, having made several investments and acquisitions to expand it, as it is vital across various critical industries.

Okay. Thank you.

Sure.

Yes, sir. Good morning everyone.

David, thank you.

Good morning. I have a couple of questions about the model. Last year in the third quarter, you mentioned mid-single-digit growth in SFC orders. Can you provide some insight into what that order growth or decline may have looked like this year? Additionally, could you comment on the other aspects related to this?

Go ahead, sorry.

So, it was flat year-over-year or it was up mid-single-digits?

It was flat year-over-year, so it's about the same as last year, which we thought was pretty good. The issue coming out of the SFC was that people hit a wall of uncertainty and began to reduce their orders. It's important to remember that the SFC reflects orders, not sales. We felt fairly optimistic. This year, we don’t anticipate any surprises, and people are still ordering roughly the same amount.

And Nick, when you think about the fulfillment on those orders from SFC this year and sort of the cadence or the timing of those orders, will there be anything different in terms of the pattern as they fall across 3Q and 4Q than last year?

The small difference is that we didn't extend it quite as far, resulting in a slightly shorter timeframe. We planned some supporting promotions in between to ensure we have backups for this situation. We'll see how that develops. In terms of tools, that's our approach. Generally speaking, David, we have the same number of orders as last year. If people don't perceive the same level of alarming uncertainty, it should go better. However, the outcome remains uncertain until we know for sure.

So, I just want to clarify, you got about the same number of orders as you did last year, but you shipped a little more in 3Q versus 4Q this year than you would have last year is what you're saying?

Yes, I am saying that. When I mention the same, I am referring to the same amount of orders adjusted for the timeframe in which we sold these products. You're suggesting that last year, we had orders out in a couple of weeks in January. This year, we didn’t experience that. I’m evaluating it over a shorter period.

Okay. I have a question for Aldo about the Snap-on Tools gross profits, which increased by 100 basis points as mentioned in your slide deck. You referred to price/cost and raw materials as well as RCI. However, you did not mention the category mix regarding the stronger hand tools compared to diagnostics. Was that an oversight, or is there something we should interpret regarding your comments?

I believe there's nothing to be concerned about. Overall, the product line is performing better in terms of efficiency. The cost of steel has decreased, especially with the cold-rolled sheet steel used in our Algona factory, which is a significant factor. The new factory arrangements have improved their efficiency slightly. They are now better at meeting the current demand. As Nick pointed out, while hand tools are beneficial, the improvement was seen across all categories.

Okay. It sounds like maybe that category mix is not quite as bigger contributor this quarter as it has been in previous quarters. Is that your assessment?

I wouldn't say that. I'm not sure where you got that idea. The point is that there are three aspects to consider, as Aldo mentioned. These include the category mix, the product mix, and some efficiencies in the factory along with material costs. There are three factors contributing to the 100 basis point improvement. What I meant by profitability is that it reflects the impact of our pivot, which has positively influenced our sales.

Next question for me, just on the fourth quarter, the Snap-on Tools segment again, you've got an easier compare on a year-over-year basis. You talked about the third-quarter truck restock going on. How are you thinking about the growth puts and takes for 4Q in Snap-on Tools?

Look, we don't give guidance. There are a lot of variables going forward, but I like our chances. If you're talking about the Snap-on Tools Group, the Tools Group seems to have momentum. If you were me and you were sitting here and saying, look, I'm confronted with uncertainty, people want to go to lower payback items. I've seen our ability to cater to that, meet that, match that requirement. I've seen the factories come on stream. I've seen us launch compelling new products. I like where we're going on this. I believe we're going forward with momentum. I can't predict the slope of the curve.

Right. Okay. Last question for me. I wonder if you could just update us on franchisee attrition trends; can you just talk about what the typical experience is with growth performance when that route comes back to the operator?

It's been about the same. It moves a tenth of a point from quarter to quarter, and the fill rate varies depending on various factors, like our ability to find people and maintaining our standards. If individuals leave from a specific area, we need to ensure we have people available in that region. That variability from quarter to quarter is driven by these factors. In the last quarter, we observed an increase in the number of assistants as a percentage of franchisees, which I see as a positive development that will benefit us when we receive orders amidst uncertainty.

Right. And the repurchase of inventory from exiting franchisees, did that impact the growth number this quarter?

There were some of that, but I wouldn't have called it a significant change year-over-year or quarter-to-quarter. There's some of it. We haven't seen it to be something that I would report to the world and say, that's a significant thing. It hasn't changed that much. It can change from time to time, but not this quarter, wasn't a big.

The next question is from Luke Junk with Baird. Please go ahead.

Good morning Nick. Thanks for taking my question. Hey Aldo. Good to catch up with you too. First one for me is on the Tools Group, third quarter up versus second quarter, a great outcome. It's obvious most years, it's the opposite, as you noted. I want to focus on execution. The focus on quicker payback items is the same. But just the enabling activities, what do you think were the bigger contributors? Is it the capacity expansions helping incrementally, Milwaukee especially? Can you tie it back to getting the mix of promotions right? Is there something we should be looking at the tool carts? Is it all of the above, Nick? Anything you spike out?

It's probably some of all of that. It's a combination of product development, pivoting to producing some of the more popular products in the midst of a factory expansion, no easy exercise for a plant manager. Those two things came together with, as Aldo said, a range of things. We had RCI up and down the corporate, both from a design point of view. We designed new products. In some cases, it allowed us to take advantage of material cost reductions. A lot came together, driving gross margin profitability 100 basis points. If you're talking about making the pivot in the sales, you're talking about pretty much getting closer to those quicker payback items and making them work and the factory being able to deliver better because we expanded the capacity. We entered this whole thing up to our eyeballs in orders, and we couldn't deliver. We expanded the capacity, and that's all sort of normalizing out. The factories are able to get more in sync with the new products coming out; we're able to deliver better, and that's working.

Got it. And then second, if you could just double-click on what you're seeing within diagnostics, specifically, we can see the number, obviously, in RS&I, but I'm wondering about Tools Group as well. RS&I flipped from down mid-single-digit last quarter to now up low single-digit. APOLLO+ is out there right now as a newer product, is that what we're seeing the RS&I number incrementally? Does Tools Group benefit from that as well, Nick?

Tools Group does benefit. One of the good things in the quarter is year-over-year diagnostics were relatively stronger, mainly on the launch of APOLLO+. I'm not saying they were incandescent, but they were pretty good in this quarter. The APOLLO+ seemed to launch pretty well. It’s early days because it’s just introduced at the SFC. People got to see the guys on the floor, plugging into cars, showing how our databases can be wielded, giving them great advantage. They went to the field enthusiastic about that. The sale was up substantially year-over-year and the activations are up nicely in the quarter. The launch looked pretty good. We think that tagline has considerable appeal in the marketplace; so that works pretty well. The other thing that's been lost is the rise of software. Subscriptions are up substantially. The titles are down, but software growth is up nicely. I don't have to tell you that, that's nice profitability across the corporation. That's another factor going on in the Tools Group.

Got it. Appreciate the color, Nick. Thanks.

Hey, good morning guys.

Morning.

Hey in the Tools Group, I mean, you talked about improving momentum. Is that mix in the sense that the low value or the quick payback product is gaining share? Or are you seeing sort of a sentiment change at the shop level? Because it still seems like traffic is pretty sluggish from talking to parts distributors and the collision industry is still down. Is it mix? Or is the mechanic sentiment improving?

Mechanic sentiment is not getting better. However, the garages appear to be busy. The investment in capital equipment for garages, particularly in collision repair, has decreased, which is somewhat unexpected. This trend is reflected in our equipment group. Meanwhile, the sentiment among technicians, particularly in our Tools Group, has not changed significantly. What we are observing is the Tools Group shifting its focus to offer appealing options that can be purchased without having to finance for three years, instead allowing payment within 15 weeks. We have always believed this approach would be effective, and it has proven to be so. A key sign of momentum, at least some improvement in this transition, is that our third quarter performance is better than the second quarter, indicating that there is some momentum in this situation, although it does not correlate with any improvement in attitudes.

Yes, the suppliers to the garages indicate that business is quite slow. Regarding corporate expense modeling for 2025, could you provide some clarity? Is the trend from Q3 to Q4 expected to remain flat? Should we anticipate this trend continuing into next year?

I'd say a little bit of hope here in my voice is that one of the reasons that we're lower this year is lower performance-based compensation expense. As we reset our plan objectives for 2025, usually you start the year assuming you're going to hit the target. If that were the case, I'd model about $27-ish per quarter, something in that range. That's how I would think about that, Bret. This year, we're not growing as fast as we had expected coming into the year, and therefore, that's one of the key reasons why there's performance-based compensation differences.

Okay. Another quick question. The election outcome is one better for you than another. If we're going to tariff imported everything, does that make the Tools business less competitive? Or how do you think about that?

Who knows? There are so many differing opinions. We will not impose taxes on tips or overtime. We will manage prices and hold supermarkets accountable. We will tax unrealized capital gains and impose tariffs globally. It's all quite chaotic. No one really knows what will occur. Making definitive statements is challenging. Each of these elements could influence corporate tax rates in various ways, depending on specific details. It's hard to draw any conclusions based on what has been stated. If they are concerned about everything happening globally, adjustments will be necessary. Those adjustments will definitely take place. However, it could be beneficial for market sellers in their production areas, but it's a complicated situation with many assumptions required to determine who might be beneficial or detrimental to us.

Okay, great. Thank you.

The next question is from Carolina Jolly with Gabelli. Please go ahead.

Hi, thank you for taking my question. It sounds like within RS&I, software and diagnostics, the higher-margin business is doing well. But can you remind me what's kind of happening in terms of the hardware in that business?

Equipment sales were strong for a considerable period, especially undercar equipment like aligners, collision equipment, and lifts. While some product categories have seen an increase, lifts have only gone up slightly. Overall, these expansions require less capital investment for repair shops and involve significant purchases made directly or through distributors. However, we're observing a slight shift in sentiment. This could be linked to the broader economic climate, as some might hesitate to invest in new installations when interest rates are expected to keep dropping. People might be thinking about waiting a bit longer before making new purchases, despite recognizing the need for new equipment to handle the complexity of modern vehicles. Unfortunately, this cautious approach has affected us negatively this quarter, and while I would like to attribute the downturn to this situation, it adds to the existing uncertainty. We believe, however, that the current concerns are more temporary than the ongoing worries technicians have.

Thank you.

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

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

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