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. 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. Operating 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 operating income 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 operating results, the overall operating income margin for the quarter was 25.5%, which compared to the 27.4% recorded last year, which included the legal benefit. This time it 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 from 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 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, we saw uncertainty and hesitation early in the period. Liberation Day and the weeks that followed created a lot of wind 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. 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 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%. The 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 created to develop products that make work easier. A great example is 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 tool's 400 rpm kicks 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 in hard-to-reach 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 overtightening, which 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. Based on a strong reception, it's now clear that they're destined for our million-dollar hit product list. 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 increasingly complex challenges of essential bolting and tensioning. Recently, we introduced the new CTM five fifty unit. 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. It delivers torque all the way from 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 the commonly used impact gun and torque wrench combinations with a single tool eliminating several cumbersome steps providing a much safer and more ergonomic path to repair. It's a design that combines the efficiency of our extraordinary revolver gear designs with the brushless motors of our power tools operation to make precision torque at high output a breeze. 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, that the bus or semi-truck or bulldozer will operate as designed and safely 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. 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 but competence-poor. They're still hesitant to tie themselves to long-term obligations. Originations were down 4.9%. Sales items like large tool 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 gained 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. For tech servicing, growing complexity, access is significant. They need help reaching, squeezing, contorting their way into compact areas, trying to make repairs without dismantling 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, during the quarter, the tools group launched a number of new products. Each delivering unparalleled access, matching the customer's preference for faster paybacks. One is the SGA S one zero two, two a two-piece radiator pick set. Each unit is seven inches from handle to the tip. 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 facility in Oakmont, Alabama. Although it might seem trivial, I assure you, modern vehicle engine bays are jam-packed. Hoses are no longer out in the open. Now even basic repairs more often than not require removing parts like fan shrouds or a range of other components. But with these tools, a tech can extract the hose with ease. Conventional setups have similar geometries but require much more space to function. Our new picks offer great access and they save a lot of time, and techs have noticed. Another quick payback is our FKC 72, a three-inch drive, stubby length hand ratchet collision in our Elizabethton, Tennessee plant. It's our smallest three-h drive ever. I mean, it's tiny. About the length of your pinky. There are a lot of narrow passages in cars. This stubby drive can go wherever your fingers can reach. But even though it's small, it offers great strength courtesy of Snap-on's unique dual-pawl system. The 72-tooth design enables five degrees of swing arc—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 serious techs, 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. That's a process that's difficult to master. If you get it right, Milwaukee's one of the few who can; it results in greater strength and delivers tighter tolerances without more costly machining. The long plier neck reaches into restricted openings, creating access. The cold forging process and the associated shaft strength enable 85% more gripping power than other models. That makes this tool a real-time saver. If you drop a part in a recessed area, you don't need to disassemble the workpiece. These units will navigate through the confined space and grab the lost component without letting go, ensuring quick retrieval. That's a significant advantage. Each of these new products makes work easier and repairs faster. All three have already achieved our $1,000,000 hit product status. Meeting with techs in the last quarter, we talked about the bottom end of the bigger ticket items. After meeting the techs and understanding their preference for faster payback tool storage, our plant in Algona, Iowa released a special offering of an entry-level KRA twenty-four twenty-two classic series roll cabinets, which are 55 inches wide. They feature a one-piece welded body with reinforced corners and a 14-gauge steel bottom panel that supports a payload of 2,400 pounds. It's ideal for organizing a tech's investments with the two drawers spanning 50 inches wide: one five-inch deep for deep sockets and a three-inch drawer for storing long pry bars and extensions. The box is functional, rugged, and relatively economical, but it grabs your attention with its 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 eye-catching box in the garage. It just came out and has already seen significant demand. So that's the tools group. Pivoting through uncertainty, back to growth, exiting the quarter with momentum, and great American-made products were the significant drivers. Now for 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 RSNI were $119,800,000, up $6,200,000 or 5.5%. The operating margin of 25.6% was 60 basis points better than in 2024. Just a little fun fact: the operating income margin for RSNI has increased year over year for 12 of the last 13 quarters. That's the RISE software and the power of RCI. RSNI shines through the turbulence leveraging our customer connection and launching innovative products. One example is our Triton platform, born in our San Jose facility. Positioned in the middle of our intelligent diagnostics offering, it provides a wireless connection between the car and the handheld device so that technicians can move freely around the bay, under the car, inspecting, troubleshooting, and testing without restraint. This is important—it accomplishes this without losing the lightning speed that's the hallmark of our wired units. The Triton two-channel lab scope now provides zoom capability, which is crucial. When waveform glitches happen in a blink of an eye, they are hard to catch on a standard unit. So Triton customers can now record, playback the test, magnify the pattern, zero in on the abnormality, identifying intermittent problems. Flexibility, speed, zoom capability, eight-hour battery life for extended use, and four times the memory allow for handling more procedures and data than ever. The launch easily exceeded prior releases. As you might expect, this powerful platform is a clear winner in the shops. RSNI is on a roll. Great diagnostic units, powerful databases, Mitchell Pro demand, repair information; the proprietary power of intelligent diagnostics; and effective shop management systems continue upward progress, driven by great hardware, significant advantages of the software, and a dedication to RCI. We will keep driving and expanding RSNI's position with repair shop owners and managers by 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 challenges and advancements. C and I were down, impacted by the shock of liberation day, but some recovery is underway as a combination develops. The tools group pivot to quicker paybacks is gaining traction, with sales up 1.6% organically. The operating income margin of 23.8% is flat to last year but represents the third highest in the group's history against the wind. And RSNI saw sales up 2.2%, with an operating income margin of 25.6%, up 60 basis points. Software continues to rise and RCI is delivering again. It all came together for overall sales of $1,179,400,000, essentially flat. Gross margins of 50.5%, down 10 basis points due to unfavorable currency transactions and the impact of volatile trade policy balanced by RCI. And operating income margins of 22% down 80 basis points adjusting for last year's legal benefit, primarily reflecting our conviction to keep investing in product, brand, and people. Results demonstrate 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, with gains in both our franchise van channel and activity with OEM dealerships and independent repair shop owners and managers. Within the industrial sector, our C and I group saw sales decline 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. This 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 costs 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 from the year-over-year strengthening of the Swedish krona versus the euro and the US dollar. We have factories in Sweden serving both the C and I and RSNI groups. In C and I, we manufacture cutting tools for our European and emerging markets, while in RSNI, our car aligner facility produces collision products sold globally. Operating expenses as a percentage of net sales rose 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 to 27.4% in 2024 again included a benefit from the legal payments. Our second quarter effective income tax rate was 22.6%, versus 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 were 25¢ per share of headwinds on a year-over-year basis. In the second quarter of 2025, diluted earnings per share included approximately 9¢ per share of increased year-over-year non-service and net periodic pension expenses, primarily from higher amortization of actuarial losses. While 2024 included a 16¢ per share benefit from the legal payments. Now let's turn to our segment results for the quarter. Starting with the 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, with 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, along with the slowdown of projects by our customers in some industries and geographies, including US aviation and the military. Demand in critical industries 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 were 26.5% in the quarter compared to 25%, largely reflecting the impact of reduced sales volumes as well as increased personnel and other costs. Operating earnings for the C and I segment were $46,900,000 compared to $62,200,000 last year, with an 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 $1,200,000 of favorable foreign currency translation. The organic increase reflects a low single-digit rise in US business, while 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% in the quarter from 25% in 2024, largely reflecting the higher sales volume. Operating earnings for the Snap-on Tools Group were $116,700,000 compared to $114,800,000 last year. The operating margin of 23.8% was unchanged from 2024. Turning to the RSNI 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 130 basis points to 46.8% from 45.5% last year, primarily reflecting increased sales of higher gross margin products as well as 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 to 21.2% from 20.5% in 2024, largely due to increased personnel and other costs. Operating earnings for the RSNI group were $119,800,000 compared to $113,600,000 last year. The 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% in the second quarter of 2025 and 1.2% in 2024. In 2025 and 2024, the respective average yields on finance receivables were 17.5% and 17.7%, while the average yields on contract receivables were 9.1% and 8.9%, 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 Triton. 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 2024 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 compared to 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 $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 for 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 non-service pension costs largely due to higher actuarial losses. These non-cash costs are recorded below operating earnings as part of other income and expense net on our statement of earnings and will have about a 9¢ per diluted share quarterly negative effect on EPS. For the balance of 2025, we 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.

Thanks, Aldo. Snap-on's second quarter results were 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 in the storm. 1.6% organically. US up. International flat. Return to positive. Operating income margins at 23.8% flat to last year, but among the group's strongest ever. RSNI continuing strength. Sales up 2.3% organically. Operating income margin of 25.6%, up 60 basis points. Rising again. And it all came together for an overall demonstration of performance against turbulence. Sales for the corporation were $1,179,400,000, essentially flat in the difficulty. Operating income margin, 22%, down 80 basis points adjusting for last year's legal benefit, with the gap driven primarily by spending to maintain full strength, preserving our advantage for when the turbulence abates. An EPS of $4.72, against comparisons showing a 25¢ headwind. We believe these results demonstrate our overall strength. They also highlight 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 in considerable distributed know-how. We make a version of our products in almost every region, 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. We believed we are resistant to tariffs, and we meant it. We further believe that as we move forward, we have momentum as the shock recedes and we have advantages 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. 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 were 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.

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 want to start with the big shift we're seeing in the tools group from Q1 into Q2. I guess with the benefit of hindsight, is there anything that sticks out to you as less normal in the first quarter in the tools group or maybe particular areas where you may have gotten caught a little flat-footed in this environment? Thinking through the lens of Q2, now that feels a lot more normal. In terms of the company's ability to navigate this turbulence, what was the most important area of internal execution this quarter? Should we think you can lean into that even more in the back half of the year?

Well, part of it was, I think the technicians. I think there was some evidence that the technicians had more uncertainty accelerating in the first quarter versus prior quarter. You saw consumer sentiment drop from December to January by 20 basis points. The lowest since '22 since the last peak. You know, the problem with the 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. Our pivoting was going better, you know, which has been going, but that spooking, that 20 basis point drop reflected in the 20 basis points, and I don't mean to tie it exactly to that. It really outran the pivot, but it stabilized. They aren't affected so much by tariffs. Liberation Day didn't affect them so much, so they're more sitting there, and then not much happens, really. 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 had 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. We sold some heavy-duty carts in the first quarter that were economical. So we did some more of that in the second quarter. I talked about it on the call regarding the classic series, with this economical box that holds a ton of tools and has these eye-popping colors. That was pretty popular. 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. I think that's one of the things we did. I'm 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 momentum. I've said this in this call; we exited the quarter stronger than when we entered.

What about the origination side of things, Nick? Generating demand for new credit? You mentioned in your script the benefit of diagnostic units that 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 as good as mine. You know what I mean? Look, I think this: originations were better. You know? For government work, we're down half as much. That's not a great 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 certainly, that would have been plumped up by the launch of the Triton. So tool storage is probably down more than that would indicate, but I don't know how that goes forward. I think it's going to take a while for customers to accommodate. But as we saw in the pandemic, which is really, I'm kind of talking about that with the C and I shock question. It's kind of like a pandemic event. Everybody got shocked. I think the technicians have been shocked for a while. I think sooner or later, if nothing new happens, they start to accommodate. They start to realize, well, you know, I'm worried, but nothing's really happened to me. My wages keep going up, and I start to say I can take 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. So that works for us. I don't know if I need the originations to come back right away. But I do think sooner or later, if nothing big happens, they start to 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 going to say this again because I said it in every third quarter. The third quarter is always squirrely. It’s 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? You mentioned momentum was much better exiting the quarter relative to, you know, this more COVID-like shock. Can you just give us a sense of where that run rate was directionally? Relatively 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 the quarter moved out. We saw the biggest changes would be in the aviation and military-related non-defense sectors, things of that nature. But general industry also started to improve. So again, while down yet in the quarter, we 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 elaborate on that? Also, what the price points are and what are the differences with this versus what you had in the market before?

Sure. Look, I don’t know if I can say the price point on this. Yeah. Let's say $4,500. Ballpark. It might be I don’t know how we can afford to sell it for that number, but okay. Around that number. It depends. There are a lot of factors. You know, what's on promotion, what isn’t? But let’s say $4,500 to $5,000, something like that. It's in the middle of the intelligent diagnostic range. Right below Zeus and above Apollo, and the difference is, is that it’s wireless rather than wired. And the big deal here is 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, and it’s wireless. So it gives you the flexibility of wireless and the speed of wired. It’s a cool thing. And then we have a Zoom feature on these two-channel scopes. You put the scope on a car and watch a waveform. Sometimes the problems in the car are very intermittent and happen for a short while, so you can't really see them on the way in. The Zoom feature allows you to freeze and zoom in. The waveform's a dynamic thing at first, so then you record it, freeze it, and zoom in on it to catch the glitches. That's a big help. It also has an eight-hour battery life, which is pretty long, making it quite usable. Additionally, we have four times the memory. The extra memory means you can store a lot, like a lot of waveforms, procedures, and data from other things. Technicians really like it. I’ve been out with franchisees in Connecticut and in Atlanta. Having dinner with a bunch of these guys, and you know, the franchisees are pretty positive about it. They love selling it. Yeah. That's good to hear. And then just lastly, in the C and I group, I think you called that the international operations were sluggish. Did the US kind of mimic that? You know, I'm not sure how much you do in the US and C and I, but I want to get an idea.

Yeah. C and I roughly. For government work, Gary, C and I is fifty-fifty. 50 in North America, 50 outside the US. You know? Europe, tops. Asia, we ourselves said we’re not importing anything from China. The thing is a 170% tariffs. Remember when they were 170%? We just said no. Asia is discombobulated in this situation. Not to mention you got the political disturbances and scandals in different places. So things are pretty turbulent in Asia. I was just there, and the markets are pretty bad. Europe has problems, too. I mean, Europe has GDP numbers that reflect the struggles in the region. In the US, really, what happened is that that’s similar to the European businesses and the Asian business, a large slice of which is in C and I. You've got the industrial businesses—pick and ship businesses, which are off the shelf, a bit like the tools field. Then it’s got project business, which is a big chunk of their business. And these things, remember, liberation day happens. We’re going to have tariffs. Well, the tariffs changed three times in April. And then nobody—they come out with 46% for Vietnam. Then they come out and say, never mind, it’s going to be 10% until July 9. Then July 9, they come out and say, well, it’s 40% direct and 20% indirect, but we’re not sure. Because the 20% is for straightforward stuff and the 40% is for transshipment. People are sitting there not wanting to commit to much because they don’t know where the world is going. I have a feeling there’s going to be a close resolution, and it’s going to resolve itself. So that means push back for people, particularly in the early parts of the quarter. They said, jeez, I don't want to commit. I don’t want to look foolish if I make a mistake. You saw some of that working through the system, especially in the project space. Now all the time, our orders kept getting stronger. People didn't pull the trigger for delivery. We like the order book; it's just that people have to figure out how they’re going to handle the tariffs, which will develop over time. It's similar to how people began to accommodate during the pandemic. That's what happened back then.

Thank you very much for that.

The next question will come from Christopher Glynn with Oppenheimer. Please go ahead.

Thanks. Yeah, a lot on that last topic, but just maybe a little follow-up. The 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. I just wanted to clarify if that motion really spanned all those categories.

No, what I was talking about maybe a little bit in Europe. You know? Asia is kind of a different deal. Asia is going to take a lot longer to address. Because, you know, you’ve got those political disturbances. And you got China, which is really struggling. So you've got all that stuff in Asia, and on top of that, you’ve got the cross-border flows, which everybody's trying to figure out, including us. We’re not taking on tariffs, but we’ve got to figure out what to do with our clients in China. You know? If we don’t want to lose them in the US and we sell in Asia. So we just need to help them a little bit, but I don’t think that gets resolved as quickly as Liberation Day. Europe is more aligned, but I really was speaking mostly about the critical industries business and their project-based business. When we say that we exited the quarter stronger than we entered, we kind of mean the tools group as well. You know, we mean, and if I could, I mean the tools group. If I'm talking about C and I, it's most pronounced in the industrial business, which is the big driver.

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

Sure. We've got a bunch of stuff looking at. I mean, you know, it’s no secret that we have a pretty large landscape or, or you know, a landscape of acquisitions that we look at constantly. And, you know, generally, there’s not much to acquire around the tool group. We probably don’t look so much at Asia these days because who the heck knows what's going to happen there. And so you're talking about expanding the repair shop owners and managers or the critical industry. Those are the areas you're looking at more or less. We're looking at several places. 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. In this situation, of course, you want to be careful. You don’t want to acquire something and then wake up and figure out, whoa, the tariffs aren’t looking so good for these guys. So you want to be 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, you might be able to get a bargain, but you’re worried about what you might buy. You know? You want to be very careful in due diligence. And we are. We take care of our money.

Great. And then, SOT. So it sounds like the sentiment moved off the bottom, a little reconciliation in the mindsets. There. And escalating your pivot work going well. I just wanted to see if any other factors layered in, you know, 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 have tariff problems. But generally, we're resistant to that stuff. You might see some of that in Canada, but, and Canada was actually okay in a quarter. So that wasn't afflicted. I don't think you saw it. I think the international business was kind of mixed. So that was flat. I think the big news is US up. And that was driven by the pivot. The hand tools were pretty successful, and the diagnostics business did pretty well. Those two things made hay in the situation, and we like that idea. Overall, if you look at the structure of the quarter for the tools group, we exited stronger. That’s just a statement; it’s no prediction. I’ve already said the third quarter is squirrelly, but generally, I like the direction we’re going there. It seems like we’ve been pivoting, and we’re getting better at it. But the uncertainty has stabilized, so if it stabilizes, every month we gain ground with the pivot.

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 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 off the van were a little lower. You know, but that would be expected when you have the kind of turbulence. I’ve described to you exiting stronger than when we entered, so that would mean it takes time for stuff to get through the van. We haven’t seen turbulence in all this. We actually saw not much variation when you look at bigger periods. A quarter is kind of a 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 vans, and then when it goes out. So it’s a lot of things like that. I think they’re pretty much in balance this time. The actual numbers were a little lower, but that would be a 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 you’re seeing. Were the diagnostics the leader in tools in the quarter?

No. Hand tools were the leader. Hand tools were the leader. And that's why I spent so much time talking about hand tools because they’re great. Those pliers are great. The cold-forged pliers are unbelievable, you know, the strength of those things. Milwaukee is probably one of the only places in the world that can do that. So we really like that kind of thing. I see it may not mean much to people who, like me, push a pencil all the time. But it's important to the techs, and they’re liking some of the stuff we’re bringing out. Now, diagnostics did pretty well, don’t get me wrong. The Triton was stupendous. But tool storage is down, you know, and stuff like that. Each quarter, there’s a new story about the products. I think the big thing is the overall number, and I don’t want to pull off the call without reemphasizing what we think is the bellwether number. That is gross margin at 50.5%. Down only 10 basis points against 50 basis points of negative currency transaction. Think about that for a minute, and you see that we’re doing okay. We’re winning the battle at the point of sale. We’re spending more to keep building our advantage in product and brand. We’re hiring a lot. Hired more engineers than we have in the 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, how much bigger that can get in the back half of the year?

I'm not you know, I swore I was not going to do that. It’s hard for me. We can make changes every day and mitigate. And the thing is, every day something new comes up. I have someone who writes a paper on what comes out of Washington that we have to review because the tariffs are always changing. Your guess is as good as mine. We have to move swiftly against it. It’s impossible to predict. All I can say is I like our position versus any of that stuff. Our position is pretty good. We make in the markets where we sell. We do have some exposures. We know how to make everything almost everywhere.

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 how that led to some order backlog. Just talk about the timing of those 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—see those projects fulfilled here in the second half, or is this kind of an indefinite push out?

No, no. Look. I think it's hard to get everything in, all the nuances. But in reality, I was talking about delays. People didn’t pull the trigger, and I’m also talking about the orders we kept getting—getting stronger. They didn’t pull back on ordering so much as they just pushed delays on projects we expect to go. I still don’t know about that. I do think we exited the business stronger than we entered. That's an important factor. It’s hard for me to predict structure or, I guess, the slope of that curve. But what happens is what happens in the pandemic—it’s similar. People start to look at it, and they start to be comfortable with the environment. They learn to deal with it. It’s like navigating the waves after a while; first, you get seasick, and then you get used to it and learn to navigate. I think that’s what’s going to happen. We're sanguine about it. But I can't predict anything like that. I do think that business is strong, though.

Yeah, even sounds like it in the numbers this quarter. Let me ask you about the tools business. Obviously, there have 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 on a long-term basis. Is that a number that you're starting to feel comfortable with as 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 we've done what we said. Our profitability is moving upwards. So I do think the tools business sees that kind of thing. This was a little unusual because you had this uncertainty go. I think there were good reasons for it, particularly now. So I’m pretty confident about the tool system business. When I talk to the franchisees, they seem pretty positive. When I talk to customers, they seem to like our product. I do think our product is stronger than ever, so I feel okay. We have to keep executing. We have to keep working. I think we're good at it, but we have to keep getting better at it. But I have no doubt it’s going to go upwards.

Let me just go back to a previous question about cash and capital allocation, and you talked about the M and A funnel looking good. Historically, you've done smaller transactions. Snap-on has stayed away from large acquisitions. You've got a net cash balance sheet, and strong free cash flow prospects, maybe $1,000,000,000 annually. You just completed a large capacity build-out program. You're not doing particularly large share repurchases, though that may change 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 you plan to use the cash?

Look. I think we’re not in a certain environment, and I mind having cash. You know, I don’t mind having it. I have confidence in the future, but I still don’t. I do believe we, at one of these points, will find a big acquisition. We just think it’s a matter of time. I've been here a long time. We haven't found one because everything we've looked at has been a little flawed. But we are not afraid to acquire anything big. Our management team is quite capable. The only thing is that I'm telling you, we won't acquire anything that's transformative. We will acquire things that are consistent with our coherent growth model. We believe there are things out there. Just haven’t been available.

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 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. I think that collision might come under the group of, you know, a lot of it is the—you know, as your collision expert, you likely know this better than I do. You have a lot of those big multi-store operators that have been building up. Our view of the world is they got a little spooked lately for a variety of reasons. They aren’t investing as much as they used to. That’s our view of the world. So we believe that's a factor in collision, making it a little more tepid. It has been robust for a long time, as you know, with a lot of movement. Maybe people are not as spooked; they’re saying, okay, I’m going to consolidate,—I’m going to 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, it's a slightly harder comparison on Q3 against a strong franchise event last year. Any color as far as what the attendance is looking like? It’s coming up in a month or so.

I just need to—I think the— I don’t know. This is our two hundred and fifth anniversary. So I think maybe it could be a little bit bigger. I don’t know. We’ll see what happens. We’re kind of planning for it to be slightly bigger. But it is, as last year, in Orlando for a number of reasons. So you never know how that’s going to go over, but we expect a robust event. Now, having said that, though, the SFC, you know, it's great; you know you like that, but it's only orders. You know? And so whenever something happens at the SFC, you got to realize it's only orders. Therefore it’s my kind of focus; while they’re better than nothing, they aren’t definitive. They’re not fully definitive. They’re just directional.

Alright. Great. Thank you. I 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.