Earnings Call Transcript - SNA Q1 2021

Operator, Operator

Good day and welcome to the Snap-on Incorporated First Quarter 2021 Results Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Sara Verbsky, Vice President, Investor Relations

Thank you, Nick, and good morning, everyone. Thank you for joining us today to review Snap-on's first quarter results which are detailed in our press release issued earlier this morning. We have on the call today 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 webcast viewer as well as on our website, snapon.com, under the Investor 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 otherwise state 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 including a reconciliation of non-GAAP measures is included in our earnings release and in our conference call slides on Pages 14 through 16. Both can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Nick Pinchuk, CEO

Thanks, Sara. Good morning, everybody. As usual, I'll start the call by covering the highlights of our first quarter and along the way, I'll give you my perspective on our results. They are encouraging, on our markets, they're standing firm and, on our progress, it's made us stronger than ever before. We'll also speak about what it all means. We believe it means we're getting better and better positioned for more even while we're still in the midst of a once-in-a-100-year pandemic. After all, Aldo will move into a more detailed review of the financials. We believe our first quarter is clear confirmation of Snap-on's ability to continue its trajectory of positive results, further accommodating the virus environment, overcoming periods of variations from business to business, dealing with macroeconomic headwinds, and advancing along our runways for both growth and improvement. Our reported sales in the quarter of $1.246 billion were up 20.2%, including $19.2 million of favorable foreign exchange and $11.3 million of acquisition-related sales. Organic sales growth was 16.3%, showing gains in every group. It's our third straight quarter of being above our pre-pandemic levels with ongoing contributions from our Snap-on value creation processes. The principles we use every day—safety, quality, customer connection, innovation, and rapid continuous improvement or RCI—all combine to drive that progress. OpCo operating income of $200.9 million was up $62 million from last year, which included $7.5 million of restructuring charges. OpCo operating margin was 19.6%, up from the 2020 level of 16.3% or 17.2% as adjusted for restructuring. For financial services, operating income of $65.3 million increased 14.8% and the delinquencies were down even in the midst of a pandemic stress test during a commercial trial of what we would call extraordinary proportion. And that results combined with OpCo for a consolidated operating margin of 23.9%, a 300 basis point improvement as reported and up 220 basis points as adjusted. First Quarter EPS was $3.50, up 40.6% from last year's $2.40 and, excluding the 2020 restructuring charges, EPS grew 34.6%. I said it before and I'll say it again. We believe Snap-on is stronger now than when we entered the great weathering. We also believe that our first quarter results testify to just that, especially when we compare them to 2019 before the virus, so let's do that. Versus 2019, our sales in the past quarter grew $102.9 million or 11.2%. That reflects $15.3 million of acquisition-related sales, $11.6 million of favorable foreign currency, and a $76 million or 8.1% economic gain. The 2021 OpCo operating margin of 19.6% was up 50 basis points from 2019 level as adjusted for a legal settlement in that earlier period. That 50-point gain was achieved against 80 points of unfavorable currency and acquisition impacts, all while still absorbing the COVID. Now to our markets, auto repair remains quite resilient. The technicians are rolling. They know they've weathered the depths of the COVID shock and have learned to accommodate the virus environment and are moving to psychological recovery. There's still some air of vigilance, but their activities are robust, and they know they won't be shocked again by a spike. They are quite positive regarding the future of driving as people pivot from shared mobility to individual transportation. Vehicle repair with the technicians is a strong and resilient market. You can hear it in our franchisees' voices, and you can see it written clearly across our double-digit numbers. Also on auto repair, the shop owners and managers are witnessing signs that the auto business is rising. Demand for new cars is high, but dealership repair and maintenance and warranty are still attenuated. So there is a gradual gain, and we're positioned to take advantage with a broader and stronger product line with innovations like our TRITON-D10 diagnostics and new acquisitions like Dealer-FX, putting us deeper into dealerships than ever before, providing us a clearer view of the future repair trends, new technologies, and evolving vehicle platforms. Dealer-FX puts us at the right place at the right time as things change. Finally, let's talk about critical industries, where Snap-on rules out of the garage solving tasks of consequence. This is where C&I operates the most internationally of our operations, and these are the customers that have been most impacted by the virus. They're slower to accommodate and to recover, but they have been recovering. In the quarter, the results showed that trend, despite some significant headwinds, including the continuing impact of the virus, the February freeze in Texas, some challenged business sectors like oil and gas, and troubled geographies like Southeast Asia. Despite that variation, we did see growth in critical industries with improvements in a number of areas including aviation, education, and heavy-duty fleet. They all combined to overcome the continuing turbulence in natural resources. Also in C&I, SNA Europe, another quarter of double-digit growth, with broad strength across the geographies in places like France, Spain, Italy, Germany, and the Nordic region. Our Asia Pacific division is also up double digits with solid increases in key countries like China, India, and Japan. So overall, I describe our C&I markets as improving and representing clear opportunity, and coupled with our auto repair-related businesses, we believe there's overall clear progress along our runways for growth, enhancing the van network, expanding to repair shop owners and managers, extended critical industries, and building in emerging markets, leveraging our broadening product line, strengthening our brand, and deploying the increasing understanding of the work that is the hallmark of Snap-on people, even in the throes of the pandemic shock. About a year ago, as we entered the virus, we recognized the resilience of our markets and the strength of our model, projecting a B recovery. And that's how it played out. You can see it in the results. So now let's turn to the segments and discuss those results. In the C&I group, on a reported basis, including $9.2 million of favorable foreign currency translation and $7.3 million of acquisition-related sales, first-quarter volume rose 15.3% compared to last year. Organic sales were up 9.5%. Double-digit growth in our European hand tool business and a mid-single digit rise in critical industries led the way. From an earnings perspective, C&I operating income of $50.7 million, including $1.4 million of unfavorable currency, represents a rise of $19.2 million compared to the $31.5 million registered in 2020, which included $4.4 million of restructuring. That all means on an adjusted basis an increase of over 40%, and the operating margin was 14.7%, with an as-reported increase of 420 basis points and 290 as adjusted. When compared with 2019, the pandemic free measuring stick sales were up 7.2%, which includes $10 million or 3.1% organic gain, $8 million of acquisitions, and $5.2 million for favorable foreign currency. Once again, C&I demonstrated sequential improvement. If you go back and look at those numbers, they keep getting closer and closer and now they're above pre-pandemic levels. Despite the ongoing uncertainty, it's one of the things I think we want to remember; the virus isn't gone, and we're still bearing it. But C&I is above that level. As part of the trend, we remain committed to extending in critical industries, the C&I sweet spot. So we'll keep strengthening our position to capture those opportunities as they arise. Enabling that attempt is our expanding lineup of innovative new products developed specifically to make critical work easier. One example is our CT9010 3 inches drive 18-volt brushless impact wrench, the newest member of our MonsterLithium family, aimed at tight spaces, sustained power, rugged durability, and precise control. The CT9010 features 320 pound-feet of bolt break-away torque and 240 pound-feet of working torque—all the power a technician needs when they're working in confined quarters. It offers a variable speed trigger and three speed selections in forward and reverse. That means greater control adaptable to any applications and no over-torquing, which is important. The 9010's advanced design also reduces motor temperature rise, providing higher durability and a great power-to-weight ratio. It's managed fitted with a 100-lumen headlight that helps technicians work in dark environments, just what's needed for those close jobs. The 18-volt battery with five amp hours ensures consistent output and extended run time, translating to less charging and more efficient workdays. All of this comes in an extremely compact size of only six and three-quarter inches in overall length, which will fit into the tightest of workspaces. The CT9010 is a great tool; it's had strong demand and is already one of our $1 million hit products. I don't want to leave C&I without mentioning SNA Europe. Double-digit sales growth again, progressed by the overall tool management system, expanding product customization to the needs of the tasks, driving progress against the twin headwinds of a difficult COVID environment. Europe is not easy these days, with the uncertainty of Brexit, no small feat. Well, that's C&I, continuing the sequential improvement and positioned for more. Now onto the tools group—sales of $478.3 million were up $102.4 million, including $6.7 million of favorable currency and a $95.7 million or 25% organic gain, double-digit growth both in the US and international operations. The operating margin was 20.7%. Yes, 20.7%, up 780 basis points compared with pre-virus levels in 2019. The tools group sales grew by $68.1 million, or 16.6%, including $5.2 million of favorable currency translation and a $62.9 million or 15.1% organic gain. This year's 20.7% operating margin was up 430 basis points compared with pre-pandemic 2019. The tools group is responding to the challenges of the day, increasing its product advantage, fortifying its brands, and further enabling its franchisees. The results show it. We believe our runway for coherent growth enhancing the franchise network represents a continuing opportunity, and there's evidence that we're realizing some of that potential across the van channel in our franchisee metrics—the financial and physical indicators that we monitor closely. Again, this quarter, they remain clearly favorable. Based on those metrics, we believe the franchisees have never been stronger, and they say so in our direct interactions at events like this past January's kickoff meeting held at a distance. It was a great affair. Well attended, strong orders, and visible commitment to our brand. Watch parties all over the country—I zoomed into several myself, and they were brimming with enthusiasm and optimism. Our franchisees, entrepreneurs and professionals, are pumped, confident, and reaching higher. The tools group quarter—that's a strong advantage for us. The tools group quarter was also marked with Snap-on value creation, customer connection, and innovation, offering new products sometimes just an improvement on an established line, but clearly making work easier, solving problems, and delivering productivity gains. All of these are born out of observing the changing work in shops on an everyday basis. We're in those shops every day, watching the work and offering the products. One such addition is our KERN681, a 7-drawer single bank EPIQ Series roll cab configured entirely with extra-wide 62-inch drawers, greater flexibility and capacity, and a standard footprint making the most of limited shop space. Our franchisees are already calling it uninterrupted storage. It's the first large capacity roll cab paired with a full complement of extra-wide drawers in the industry. I recently saw some of these being made at our plant in Algona, Iowa just last month, and the local team is proud of them. It comes with two swivel and two rigid casters located right on the corners of the box. That may seem like a small change, but it’s a clever innovation that provides mobility in tight spaces while also greatly enhancing box stability—a very important feature for a high-capacity unit. The KERN681 boasts epic strength and styling, with an 8,000-pound low capacity and more than 45,000 cubic inches of storage space. The franchisees are saying it's been a clear hit, and they're right. We spent some time over several quarters working to expand the franchisees' selling capacity, harnessing social media, improving product training, and RCI and van operations. So that's paid off, selling capacity is up, and you can see it clearly in the three straight gangbusters quarters for our tools group. I don't need to say any more about them. Now let's speak about RS&I—first quarter organic sales rose 7.6% with varying gains across the board, undcar equipment coming back and delivering a double-digit rise, diagnostics and information products, with independent repair shops growing at mid-single digits and the business focused on OEM dealerships advancing low single digits. Operating earnings of $81.4 million, including $1.5 million of unfavorable foreign currency effects, increased $4.1 million from 2020, which included $3.1 million of restructuring costs. Compared with 2019, sales grew $19.7 million or 6%, including a $10 million or 3.1% organic gain, $7.3 million from acquisitions, and $2.3 million of unfavorable foreign currency. We clearly see the potential and a runway for growth in the RS&I group, expanding Snap-on's presence in the garage with coherent acquisitions and a growing line of powerful products. RSI's organic growth in the quarter was broad-based, but the double-digit rise in undercar equipment was especially welcome. This was led by innovative products like our newly introduced Tru-Point ADAS calibration system. Advanced driver assistance systems or ADAS are active and passive aids to keep vehicle passengers safe, things like collision avoidance, lane departure warnings, automatic parking, and crosswind stabilization. These new features are great, but what's truly music to our ears is that they require periodic calibrations to ensure they're working with precision, and calibrations can be complicated. Sensors and cameras vary considerably across vehicle makes and models, and if you get a faulty recalibration, it leads to rework and isn't good for safety. So our new John Bean 2.8 ADAS calibration system is the fix, ensuring that the vehicle is physically aligned correctly, guiding calibration of the sensors, and documenting that the procedure was performed appropriately. It does so for the multitude of makes and models seen regularly in OEM and aftermarket shops. The new Tru-Point is easy to use. It requires minimal training and compensates for floor irregularities common in garages. Alignment and calibration are quick and efficient, ensuring OEM compliance. It's a powerful product right in the crosshairs of automated vehicle technology that's so prominent today. Progress in diagnostics and information with independent repair shop owners and managers was also clearly evident in our diagnostics business and our RS&I activity. In this quarter, we launched the new Triton D10 hand-held device, which helped bolster that positivity. The new TRITON is ultra-fast. It offers a two-second boot-up and has a best-in-class 10-inch touchscreen, geared toward the more capable technician, offering a one-touch full diagnostic code scan, scope capabilities for performance display, and guided testing of suspect components to ensure an efficient and effective solution for those very time-consuming problems. Just what the capable and senior technician needs. As I've said before, we've spent considerable effort to help franchisees sell the complex tools of today efficiently, and it's paying off with the TRITON. Each of our franchisees received a demonstration unit, facilitating hands-on training guided by video presentations that were a prominent part of our networks' February sales meetings. Following that initial instruction, a demo unit could then be put immediately in the hands of a technician to physically showcase the great benefits of our powerful new tool, and it worked. The launch has been a success. Our franchisees are comfortable selling new and complex tools, and many are now calling the TRITON-D10 the best diagnostic unit ever. Finally, RS&I got a nice boost in the quarter, as often is the case, driven by new technologies and OEM dealerships, helped by some significant essential tools and equipment programs supporting the new electric vehicle launches. We're quite positive about RS&I's future, with repair shop owners and managers as the vehicle industry evolves. It plays to our strength. So those are the highlights of the quarter: continued and strong progress, our third straight period exceeding pre-pandemic levels, C&I showing sequential improvement, sequential advancement, RS&I being solid, the tools group strong and prompt. Organic sales rising 16.3%, OpCo operating margin 19.6%, EPS $3.50—a big rise, and most importantly, more testimony that Snap-on has emerged from the turbulence much stronger than when we entered. It was an encouraging quarter. Now I'll turn the call over to Aldo.

Aldo Pagliari, CFO

Thanks, Nick. Our consolidated operating results are summarized on Slide 6. The first quarter of 2021 exhibited robust financial performance, particularly when compared to last year, when we experienced the initial shock of the virus. The quarter's results also compared favorably with the first quarter of 2019, which, being a pre-pandemic time period, may serve to be the more meaningful baseline. Net sales of $1.246 billion in the quarter increased 20.2% from 2020 levels, reflecting a 16.3% organic sales gain, $11.3 million of acquisition-related sales, and $19.2 million of favorable foreign currency translation. Additionally, net sales in the period increased 11.2% from $921.7 million in the first quarter of 2019, including an 8.1% organic gain, $15.3 million of acquisition-related sales, and $11.6 million of favorable foreign currency translation. Consolidated gross margin of 50.1% compared to 49.5% last year, which included 60 basis points from restructuring costs. The gross margin contributions from the higher sales volumes benefited from the company's RCI initiatives, which were offset by 40 basis points of unfavorable foreign currency effects. Operating expenses as a percentage of net sales of 30.5% improved 270 basis points from 33.2% last year, which included 30 basis points from restructuring costs. The improvements primarily reflect higher sales and cost containment actions, partially offset by higher stock-based costs and 30 basis points of operating expenses related to acquisitions. Operating earnings before financial services of $200.9 million compared to $138.9 million in 2020, reflecting a 44.6% year-over-year improvement. As a percentage of net sales, operating margin before financial services of 19.6% improved 330 basis points from 16.3% last year, which included 90 basis points for restructuring costs. Financial services revenues of $88.6 million in the first quarter of 2021, compared to $85.9 million last year, while operating earnings of $65.3 million increased $8.4 million from 2020 levels, principally due to the higher revenue as well as lower provisions for credit losses. Last year's provisions included a $2.6 million charge for higher reserves resulting from the economic uncertainty caused by COVID-19. Consolidated operating earnings of $266.2 million increased 36% from $195.8 billion last year. As a percentage of revenues, the operating earnings margin of 23.9% compared to 20.9% in 2020, which included 80 basis points from restructuring costs. Excluding the restructuring costs, the operating earnings margin in 2021 increased 220 basis points from last year. Our first-quarter effective income tax rate is 23.5% compared to 24.2% last year, which included a 10 basis point increase related to the prior year quarter's restructuring charges. Finally, net earnings of $192.6 million or $3.50 per diluted share increased $55.4 million, or $1.01 per share from 2020 levels, representing a 40.6% increase in diluted earnings per share. Additionally, net earnings increased $14.7 million or $0.34 per share from 2019 levels, representing a 10.8% increase in diluted earnings per share. Net earnings in 2020 included restructuring charges of $6 million after tax, or $0.11 per diluted share, and net earnings in 2019 included a benefit of $8.7 million after tax, or $0.15 per diluted share from a legal settlement. Excluding these items, diluted earnings per share of $3.50 in 2021 increased 34.6% from 2020 and 16.3% from 2019 levels. Now let's turn to our segment results. Starting with the C&I group on Slide 7, sales of $345.7 million increased 15.3% from $299.9 million last year, reflecting a 9.5% organic sales gain, $7.3 million of acquisition-related sales, and $9.2 million of favorable foreign currency translation. The organic gain includes double-digit increases in the segment's European based hand tools business and the Asia Pacific operations, as well as a mid-single digit gain in sales to customers in critical industries. Improvements in year-over-year sales growth were widely seen across Europe as well as in most emerging markets. Additionally, within critical industries, strong sales gains were achieved in aviation, heavy duty, and technical education. While year-over-year declines in the natural resources sector improved from those experienced in the fourth quarter of 2020, they continue to lag pre-pandemic sales levels. As a further comparison, net sales in the period increased 7.2% from 2019 levels, representing a 3.1% organic sales gain, $8 million of acquisition-related sales, and $5.2 million of favorable foreign currency translation. Gross margin of 38.7% improved 190 basis points from 36.8% in the first quarter of 2020, which included 150 basis points from restructuring charges. Aside from the improvements resulting from lower restructuring costs, contributions from higher sales volumes were partially offset by 70 basis points of unfavorable foreign currency effects. Operating expenses as a percentage of sales of 24% improved 230 basis points compared to last year, primarily due to the higher volumes and savings from cost containment actions. Operating earnings for the C&I segment of $50.7 million, including $1.4 million of unfavorable foreign currency effects, compared to $31.5 million last year with an operating margin of 14.7% compared to 10.5% a year ago. Turning now to Slide 8, sales in the Snap-on tools group of $478.3 million increased 27.2% from $375.9 million in 2020, reflecting a 25% organic sales gain and $6.7 million of favorable foreign currency translation. The organic sales increase reflects double-digit gains in both our US and international operations. Net sales in the period increased 16.6% from $410.2 million in the first quarter of 2019, reflecting a 15.1% organic sales gain, and $5.2 million of favorable foreign currency translation. Gross margin of 45.9% in the quarter improved 320 basis points from last year, primarily due to higher sales volumes and benefits from RCI initiatives. Operating expenses as a percentage of sales of 25.2% improved from 29.8% last year, primarily due to higher sales volumes and savings from cost containment actions. Operating earnings for the Snap-on tools group of $98.9 million compared to $48.6 million last year. The operating margin of 20.7% compared to 12.9% a year ago, an increase of 780 basis points. Turning to the RS&I group shown on Slide 9. Sales of $347.6 million compared to $314.6 million a year ago, reflecting a 7.6% organic sales gain, $4 million of acquisition-related sales, and $4.8 million of favorable foreign currency translation. The organic increase includes the double-digit gain in sales of undercar equipment, mid-single-digit increases in sales of diagnostic and repair information products to independent repair shop owners and managers, and a low single-digit gain in activity with OEM dealerships. As compared to 2019 levels, net sales increased 6%, reflecting a 3.1% organic sales gain, $7.3 million of acquisition-related sales, and $2.3 million of favorable foreign currency translation. Gross margin of 46% declined from 47.9% last year, primarily due to the impact of higher sales and lower gross margin businesses and 70 basis points of unfavorable foreign currency effects. As a reminder, undercar equipment as well as facilitation program-related activity, both of which had healthy sales increases in the quarter, typically have a gross margin rate that is below the RS&I segment's average. Operating expenses as a percentage of sales of 22.6% improved 70 basis points from 23.3% last year, which included 80 basis points of restructuring costs. Excluding the effects of restructuring, benefits from the higher sales volumes were more than offset by 80 basis points of operating expenses related to acquisitions. Operating earnings for the RS&I group of $81.4 million compared to $77.3 million last year with an operating margin of 23.4% compared to 24.6% a year ago. Now turning to Slide 10, revenue from financial services of $88.6 million, compared to $85.9 million last year. Financial services operating earnings of $65.3 million, compared to $56.9 million in 2020. Financial services expenses of $23.3 million decreased by $5.7 million from 2020 levels, primarily due to lower provisions for credit losses, resulting from $2.4 million of lower year-over-year net loan charge-offs and the absence of the previously mentioned first quarter 2020 $2.6 million charge. As a percentage of the average portfolio, financial services expenses were 1.1% and 1.4% in the first quarters of 2021 and 2020, respectively. In the first quarter, the average yield on finance receivables of 17.6% in 2021 compared to 17.7% in 2020. The respective average yield on contract receivables was 8.4% and 9.0%. The lower yield on contract receivables in 2021 includes the impact of lower interest business operations support loans for our franchisees. These loans were offered during the second quarter of 2020 to help accommodate franchisee operations in dealing with the COVID-19 environment. As of the end of the first quarter, approximately $11 million of these operational support loans remained outstanding. Total loan originations of $261.8 million in the first quarter increased $6.2 million or 2.4% from 2020 levels, reflecting a 1.7% increase in originations and finance receivables while originations of contract receivables were up 5.7%. Moving to Slide 11, our quarter-end balance sheet includes approximately $2.2 billion of gross financing receivables, including $1.9 billion from our US operation. Our worldwide gross financial services portfolio decreased $25.8 million in the first quarter, primarily due to an increase in net collections. The 60-day plus delinquency rate of 1.6% for the United States extended credit is down 10 basis points from the first quarter last year and down 20 basis points as compared to the fourth quarter of 2020. We believe this reflects the typical seasonal delinquency pattern that customarily results in a decline in the first quarter, followed by increases later in the year, usually peaking in the fourth quarter, where we compete with the technicians' holiday-related discretionary spending. As it relates to extending credit or finance receivables, trailing 12-month net losses of $43.9 million represented 2.55% of outstandings at quarter end, down seven basis points sequentially, and down 44 basis points as compared to the same period last year. Now turning to Slide 12, cash provided by operating activities of $319.3 million in the quarter increased $105.9 million from comparable 2020 levels, primarily reflecting the higher net earnings and net changes in operating assets and liabilities, including a $32.1 million decrease in inventory. Net cash used by investing activities of $207.2 million included $200 million for the acquisition of Dealer-FX and capital expenditures of $19.3 million, partially offset by net collections of finance receivables of $12.1 million. Free cash flow during the quarter of $312.1 million was 158% in relation to net earnings. Net cash used by financing activities of $131 million included cash dividends of $66.7 million and the repurchase of 722,000 shares of common stock for $151.9 million under our existing share repurchase programs, partially offset by proceeds from stock purchase and option plans of $93 million. As of quarter end, we had remaining availability to repurchase up to an additional $268.7 million of common stock under existing authorizations. Turning to Slide 13, trade and other accounts receivable increased $10.1 million from the 2020 year end. Days sales outstanding of 62 days compared to 64 days at the 2020 year end. Inventories decreased $16.4 million from the 2020 year end, and on a trailing 12-month basis, inventory turned to 2.6 compared to 2.4 at year end 2020. Our quarter-end cash position of $904.6 million compared to $923.4 million at year end 2020. Our net debt to capital ratio of 12.4% compared to 12.1% at year end 2020. In addition to cash and expected cash flow from operations, we have more than $800 million of available credit facilities. As of quarter end, there were no amounts outstanding under the credit facility, and there were no commercial paper borrowings outstanding. That concludes my remarks on our first-quarter performance. I'll now briefly review a few guidance points for 2021. We anticipate capital expenditures will be in the range of $90 million to $100 million. We currently anticipate that in the absence of any changes to US tax legislation, our full-year 2021 effective income tax rate will be in the range of 23% to 24%. I'll now turn the call back to Nick for his closing thoughts.

Nick Pinchuk, CEO

Thanks, Aldo. Well, that's our first quarter—another encouraging period, resilient markets through the shock and on the way to psychological recovery, the third straight quarter of upward trajectory. There’s clear year-over-year achievement, and the third straight quarter of results exceeding the pre-pandemic levels of 2019. RS&I sales continuing upward with wide margins of 23.4%, attenuated but still strong. C&I, ongoing sequential growth across the world, and OI margins at 14.7%, up nicely from 2019. The tools group, sales up organically 25% versus 2020, up in all product lines and in all geographies, volume up 15.1% versus 2019, and an OI margin of 20.7%. Finally, financial services in the midst of the greatest stress test—a solid profit with delinquencies down, rock solid. All these came together with Snap-on sales rising organically 16.3% versus 2020 and 8.1% versus '19. OI margin was 19.6%, up significantly despite the virus, unfavorable currency, and acquisition impacts, and the EPS was $3.50, a substantial rise versus both 2020 and 2019. We do believe that Snap-on has abundant opportunity as COVID recedes and the world shifts away from the cities and shared transportation, and as new vehicle technologies make the car park more complex. We further believe that we are stronger today than when we entered the storm. Our advantages of product, brand, and people are even greater. We're in a favorable position to wield those strengths, realize the opportunities, and continue our positive trajectory throughout 2021 and beyond. Before I turn the call over to the operator, I'll speak directly to our franchisees and associates. Many are listening. I want you to know that your work in this weathering has made a difference to our company and our society. For your efforts in keeping our world and its critical mobility intact, you have my admiration. For your contribution to our progress in this first quarter, you have my congratulations. And for your unfailing dedication to our team in both smooth and turbulent times, you have my thanks. Now we'll turn the call over to the operator.

Operator, Operator

Thank you. Our first question comes from Gary Prestopino with Barrington Research. Please go ahead.

Gary Prestopino, Analyst

Hey, good morning, everyone.

Nick Pinchuk, CEO

Good morning, Gary.

Gary Prestopino, Analyst

Couple of questions here, Nick. We haven't really seen this kind of growth in the tools group since probably the earlier part of last decade. A lot of that was dealing with tool storage. And I don't think it's the same issues now. I mean, if you could cite three or four things that are different in the growth metrics now what you're seeing, especially over the last couple of quarters versus what you saw, maybe when tool storage was really rubbing up on an earlier period last decade.

Nick Pinchuk, CEO

Yeah, I think there's a couple of things. First, this isn't just tool storage anymore as it was much more focused growth back then. We introduced the Rock N' Roll Cabs and the Techno's, which focused on a particular product line. This is a broader phenomenon, much more rooted in expanding the capabilities of the tools and franchisees. We harness social media better now, we're training them better to get the elevator pitch down, and we've been working on RCI in their vans for quarters now, even back to 2019. We've been working hard on that during COVID, as we had time to focus on it, and now it's really paying off. It's showing that these franchisees can hit this 20%. The other thing is that we have some good products, particularly around hand tools. We've packaged the hand tools, selling not only individual tools but also kits aimed at particular problems, and they're becoming quite popular. We didn't talk about them on the call, but you could see products like putting together a set of sockets for particular applications in foam; they're wildly popular. Finally, product and process-based improvements contribute to sales success. The international business, such as in the UK, Australia, and Canada, are also up, suggesting regional stimulus impacts as well.

Gary Prestopino, Analyst

Right, okay, that's good. And then in terms of I guess, it's Dealer-FX, a couple of questions on this one. What can you tell us in terms of their installed base across dealerships versus the amount of dealerships that you actually service? Can you give us some idea of just how much whitespace there is out there for this product?

Nick Pinchuk, CEO

Yeah, they tend to be in the double-digit percentage of the dealerships, but they tend to be concentrated in a couple of OEMs. There is a lot of whitespace to grow in that situation. We see tremendous opportunity. And the other thing about Dealer-FX is that, as we discussed in the acquisition, they're just now rolling out their updated system, which was ready to go but COVID hit. So now they get the chance at the apple with full force. But again, these are things we knew when we acquired them. It's early days—we've only owned them for a couple of months—but we're pretty confident we're in the right place at the right time, as I said in my comments.

Gary Prestopino, Analyst

Are they going to be—are their revenues booked in the RS&I segment?

Nick Pinchuk, CEO

Yeah, they're going to be in RS&I.

Gary Prestopino, Analyst

In RS&I?

Nick Pinchuk, CEO

Yes, because they will be selling to dealers. We see them as sort of like the advanced warning system for us from a strategic point of view. You remember the old Distant Early Warning line I used to be reminded of years ago, to keep track of the Russia bombers? This is the same kind of thing.

Gary Prestopino, Analyst

Okay, and then you also just mentioned some new tools for the EV market. Could you maybe elaborate a little bit on that?

Nick Pinchuk, CEO

Well, those things are particular to specific vehicles. We have a business we call the EQS business that is rooted in new technology. When new technologies roll out, or when OEMs come to us and say, 'Hey, put together a set of tools for us,' that's what we do. We have a 70-unit toolset that supports certain new vehicles coming out. So as OEMs roll out new vehicles, they commission these kinds of tools to facilitate dealership readiness. And as people roll out new vehicles, they commission these kinds of things to facilitate the dealerships to be ready to deal with new technology. We also launch other tools to match what the OEMs didn't even anticipate going forward. We have a standard set of tools designed for electric vehicles—what we call insulating tools—made with glass-infused nylon, which allows technicians to use them safely against high voltages. This includes sockets, pliers, and screwdrivers, as well as kits to safely disconnect electric vehicles.

Gary Prestopino, Analyst

Okay, and just lastly real quick, I don't want to take up too much more time. I would assume some of these calibration tools for ADAS and things that you've got out there, these are also applicable to the EV market?

Nick Pinchuk, CEO

Yeah, sure. They're rooted in the sensors around the vehicle, so they are agnostic to the powertrain.

Gary Prestopino, Analyst

Thank you so much.

Nick Pinchuk, CEO

Sure.

Operator, Operator

Thank you. And our next question comes from Christopher Glynn with Oppenheimer. Please go ahead, sir.