Snap-On Incorporated

Good day and welcome to the Snap-on Incorporated 2026 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 remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the call over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Thank you, Cole, and good morning, everyone. We appreciate you joining us today as we review Snap-on's second quarter results, which are details 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 the 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, snap-on.com, under the Investors section. The slides will be archived on our website along with the transcript of today's call. Any statements made during this call relative to management's expectations, estimates, or beliefs or that otherwise discuss management's or the company's outlook, plans, or projections are forward-looking statements and actual results may differ materially from those made in such statements. Additional information and the factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings. Finally, this presentation includes non-GAAP measures of financial performance, which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our earnings release issued today, which can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Thanks, Sara. Good morning, everyone. This was some quarter. That's when we got that snap on execute, even in a blizzard, and our operations represent a clear and credible beacon showing a continuing path for a positive trajectory as we go forward. Quarter, I'd say, was marked with ongoing momentum and more green shoots. Progress against the whirlwind. I mean, this is a turbulent time. You know, I don't know. I'm not sure I've seen more elements of uncertainty packed into a single quarter. Ukraine, inflation, fluctuating tariffs, restructured supply chains, and now piling on the impasse with Iran. Really something. The Snap-on shook it all off, punching right through the difficulties or the fog with emphasis. Fortified by the inherent, and that was because we were fortified by the inherent and enduring positives of our markets. The rising complexity of vehicles, the aging car park, the growing demand for precision and customization in critical industries, and the rise of technology software that makes the special and the proprietary more powerful. And you put all of that together with our decisive advantages in product and brands and people, amplify it with our snap-on value creating processes, driving improvements, it makes for a powerful combination that creates an encouraging quarter and a very promising future. And so it was. Now, I'll take you through all that. and hitting some of the highlights and giving you my perspectives on what it all means. And Aldo will give you a detailed review of the financials. Let's start with the results. I believe they testify to all that I just said. Second quarter as reported sales were $1,235,000,000 of $55.7 million or 4.7% including $11.5 million from the recent additions of high force and diesel laptops. 8.7 million in favorable foreign currency translation and an organic gain of 3%. The operating income or OI, we'll call it from now on, was 268 million. And the operating margin for the quarter was 21.8% compared to the 22% last year. Down, down slightly, but still strong, especially in this environment. The gross margin, was an attention-getting 51.4%, 90 basis points higher than last year. So the overall story of the period was an encouraging performance, overcoming the cost pressures and funding the investments for the future. For Finco, the OI was 67.5 million versus the 68.7 million in 2025. and when you combine that with our OPCO OI, it resulted in a consolidated operating margin of 25.2%. And EPS was $4.96, up 24 cents or 5.1%, another positive. So those are the numbers. Now let's turn to the markets. Vehicle repair is still a great place to be. Cars and trucks are essential parts of our lives. But keeping them out of the road is more and more of a challenge. The park is getting older every day. The models are getting more complex with each new launch. And so I would say, I've said it before, I think this is the golden age of vehicle repair. And the numbers tell the story. Spending on repair, technician hours at work, and mechanic wages are all up. So the garages are pumping and the techs remain cast rich. You know, in this environment, they still remain confidence poor. The uncertainty hasn't gone away.