Snap-on SNA Q1 2026 Earnings Call Transcript

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DATE

Thursday, April 23, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chairman & Chief Executive Officer — Nick Pinchuk
• Senior Vice President & Chief Financial Officer — Aldo Pagliari
• Vice President, Investor Relations — Sara Verbsky

TAKEAWAYS

• Consolidated Net Sales -- $1.21 billion, up 5.8% as reported and 3.4% organically, reflecting a first-quarter record and second-highest quarter overall.
• OpCo Operating Income -- $250.8 million, up from $243.1 million, with operating margin at 20.8%, down 50 basis points, including 40 basis points of unfavorable foreign currency.
• Total Gross Margin -- 50.4%, compared to 50.7% last year, as 40 basis points of negative currency effects outweighed RCI savings.
• Tools Group Sales -- $480 million, up 3.4% organically, driven by gains in both U.S. and international operations.
• Tools Group Operating Margin -- 21.6%, up 160 basis points, with gross margin rising 140 basis points to 47.7% due to RCI savings and higher sales.
• Tool Storage Sales -- Increased more than segment average, with both new lower price point roll carts and the commemorative “Tribute to America” box cited as contributors.
• Diagnostics Sales in Tools Group -- Described as challenged, with other tool categories up during the period.
• C&I Segment Sales -- $381.6 million, up 10.8% as reported and 7.1% organically; growth driven by critical industries such as aviation, heavy duty, and natural resources.
• C&I Operating Margin -- 14.4%, down 110 basis points, with 50 basis points due to unfavorable currency and with inflationary headwinds from tariffs and materials.
• RS&I Segment Sales -- $485.3 million, up 2% as reported; organic growth in diagnostics and repair information offset by declines in OEM dealership business, resulting in the highest ever quarterly sales for the segment.
• RS&I Operating Margin -- 24.6%, down 110 basis points, as higher personnel costs and technology investments outweighed increased gross margin of 46% (up 30 basis points).
• EPS -- $4.69, up $0.18 year over year, with net earnings at $247 million.
• Financial Services Revenue -- $101.1 million, down $1 million, with operating earnings at $68 million (down $2.3 million, or 3.3%).
• Loan Originations -- $264.6 million, a decrease of $4.1 million, or 1%, from last year.
• Extended Credit 60+ Day Delinquency Rate (U.S.) -- 1.9%, improved by 10 basis points versus the prior year and by 20 basis points sequentially.
• Trailed Net Losses (Extended Credit Portfolio) -- $72.9 million, representing 3.75% of outstandings at period end.
• Ending Cash Position -- $1.75 billion, with no borrowings under the credit facility and over $900 million of additional borrowing capacity available.
• Capital Expenditures -- $21.2 million in the period; full-year expectation approximates $100 million.
• Share Repurchases -- 267,000 shares repurchased for $99.9 million, leaving $234.1 million authorized for additional repurchases.
• Effective Income Tax Rate -- 22% for the quarter; full-year guidance is 22%-23%.

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RISKS

• Operating margins declined across segments, with executives repeatedly citing "unfavorable foreign currency" and elevated tariffs and material costs as direct causes.
• RS&I segment reported lower operating income and margin due to "higher personnel costs, and expanded technology investment," and "lower sales associated with OEM programs in North America."
• Financial Services experienced both lower revenue and higher expenses, with operating earnings down 3.3%, and originations falling 1%.

SUMMARY

Snap-on (NYSE:SNA) delivered record first-quarter sales and robust organic growth, with C&I segment gains fueled by aviation and heavy industry, while tool storage saw resurgence linked to new product introductions. The period featured a notable improvement in credit quality metrics, including sequential reductions in extended credit delinquencies, even as loan originations were modestly lower. Investments in proprietary technology and data solutions accelerated, with modern offerings like StreamLab and ProSeries cited, enhancing the company's positioning in both repair shop and critical industry markets.

• Executives do not expect significant changes to tariff impact, and are only pursuing possible refund avenues to preserve rights, emphasizing they are not relying on rebates for future results.
• Management described franchisee and technician confidence as "tepid" for long-term purchases, but signaled growing receptivity to "shorter payback solutions," and highlighted recent positive sentiment captured in field discussions.
• Recent improvements in tool storage were attributed to both commemorative and value-focused new offerings, with color variety and matching options identified as key drivers of demand.
• C&I growth was largely decoupled from military spending, driven instead by commercial customized kits and expansion in aviation; management noted that military was "flat" and not a growth engine in the period.

INDUSTRY GLOSSARY

• RCI: Rapid Continuous Improvement -- Snap-on's proprietary methodology focused on operational efficiency, product innovation, and process enhancement.
• OEM: Original Equipment Manufacturer -- Refers to manufacturers that produce parts and equipment that may be marketed by another manufacturer.
• OpCo Operating Income: Operating income excluding results from the Financial Services segment.
• Organic Sales: Sales growth excluding the impact of acquisitions, divestitures, and currency fluctuations.
• Extended Credit: Financing offered by Snap-on to its customers for the purchase of tools and equipment, measured by receivables outstanding and related credit metrics.

Full Conference Call Transcript

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 will take your questions. As usual, we 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. 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 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 our 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 would now like to turn the call over to Nick Pinchuk. Nick?

Nick Pinchuk: Thanks, Sara. Good morning, everybody. Wow. What a quarter. You know, there are a number of different storylines threaded through our last three months. But I believe if you step back and you look at the whole, you can see several important facts. First is that this has been a period of considerable uncertainty, but the resilience of our markets and the strength of our operations have restarted a momentum, registering strong sales. It is also quite clear that our team continued to invest in expanding and preserving our strength, in our line of new products, in our continuing brand position, and in new technologies for more powerfully wielding our proprietary databases.

We believe, and many people believe, that the combination of technology and proprietary databases are among the great powers in business today. And through the blizzard, with uncertainty and tariffs, opposing currencies, rising material costs—all the elements of a storm—our gross margins have resisted the impacts and overall have remained at a strong level. So today, I will review with you the highlights of our quarter. I will give you my perspective on our results, on the markets, and our progress. And after that, as usual, Aldo will give you a more detailed review of the financials. For us, when you look at the quarter and what it means, we proceed with confidence.

Confidence in our markets, in our products, in our brands, and of course, confidence in the knowledge and energy of our experienced and capable team. And as such, we are encouraged by our first quarter results. We believe they reaffirm that this confidence is well placed even in the most difficult of times. And you can see it in the numbers. Overall sales in the quarter were $1.2072 billion, up 5.8% from last year as reported, including a 3.4% organic increase, a new first quarter record, and our second-highest quarterly sales ever. OpCo operating income, or OI, for the quarter of $250.8 million was up compared to the $243.1 million recorded in 2025.

And the OpCo operating margin was 20.8%, 50 basis points below last year, but still strong, despite the 40 basis points of unfavorable foreign currency and the impacts of higher investment. For Financial Services, operating earnings of $68 million in the quarter were lower by $2.3 million, or 3.3%. Our overall EPS was $4.69. This was up $0.18 from 2025, and the results show broad gain, overcoming the uncertainty and demonstrating our resilience. Now let us turn to the market. We continue to believe that the vehicle repair environment remains robust—extremely favorable—requiring a continued stream of new tools and information systems for confronting the rising complexities of the modern vehicle. It is clearly an unmistakable trend.

Repair shops—dealerships and independents—they see it every day. They will tell you repairs are tougher and more complicated. And we love it. The ongoing strength of the market is confirmed by its key metrics. Car park continues to age—the average age now at 12.8 years—naturally requiring more extensive maintenance and overhauls. And that is seen clearly if you look at household spending on vehicle repairs; it is up high single digits in the quarter. But it is more than vehicles. It is also seen in the world of the shops and the techs. The hours worked are up, and the tech wages are rising. Garages are on and the need for more skilled techs continues to increase.

We believe all these data points say that vehicle repair is stronger than ever, and the prospects just keep getting better. That said, the uncertainty is still high across the American grassroots. Tech confidence remains tepid—reticence toward long-term purchases—but they are bullish on shorter payback solutions that make work easier, faster, safer, and help them beat the clock and move on to the next vehicle. Now, Snap-on Incorporated speaks with its franchisees and techs all the time. And my recent conversations with individuals in our van network coast to coast say that green shoots are popping up. Even with our tool storage units—they were up this quarter. I will say that again: tool storage was up.

And as I spoke to the franchisees, they expressed their excitement about where they are positioned, and they are enthusiastic about their future. As I said, they see great opportunity. Having said that, it still seems that with each day, there is more bad news for breakfast. I mean, the hits just keep on coming—risking and otherwise—uncertainty. Having said that, though, we like where we are standing: rooted in the resilient vehicle repair market, continuously connected with the tech, observing the work, launching great new products, and having the capacity to manufacture them right here in America. And in this environment, we are seeing what we think might be an early thaw.

Now let us shift to the other half of the automotive segment. This is where Repair Systems & Information, or RS&I, resides, servicing shop owners and managers. The activity in the sector remains consistent, although it does at times reflect variations based on new product timing or OEM campaigns. Our shop owners and manufacturers see the trends. They know vehicle complexity is rising, and that it drives the need for more sophisticated systems, equipment, and tech assists to manage those changes. As I just said, the drumbeat can be influenced by the lumpy nature of the OEM project sector.

But the owners and managers keep saying they need more techs, the garages are busy, the repair difficulty is increasing, and they need more help in keeping pace. I can tell you Snap-on Incorporated is up to that. That is why RS&I continues investing in modern equipment and diagnostics that navigate procedures on vehicles new and old with precision and with speed. Now, we do have a strong lineup in undercar and collision equipment in RS&I. But particularly powerful are our diagnostics and information systems and proprietary databases.

We continue investing in that advantage, fortifying our positions by applying new technologies like large language models and natural language translators—capabilities that enable us to expand our datasets more quickly and wield the resulting systems more powerfully. The progress of our systems that search billions of data points, matching the unique vehicle profile and current systems to just the right fits—and it all happens in seconds. A great example is our newly launched StreamLab feature that streamlines the process for confronting job estimates—part of Mitchell 1. Estimates are a particularly thorny and time-consuming challenge for any shop. But our new system for Mitchell 1 makes it much easier.

We are going to hear a lot about that later as we go forward. So that is vehicle repair—robust for both individual techs and for garage owners and managers. And we believe we have a decisive advantage in both arenas. We expedite repairs, we improve productivity, we keep vehicles moving, and we help techs and the shop make much more money. We believe it is a great place to be. Now let us go to the critical industries.

This is where our Commercial & Industrial Group, or C&I, operates, rolling the Snap-on Incorporated brand out of the garage, into harsh environments where the penalty for failure is high, the workers demanding, and the need for precision, repeatability, and reliability are high—all conditions that warrant a Snap-on Incorporated-level product. C&I covers a wide range of applications, from the latest space missions to expanding the power grid to extracting natural resources to helping build data centers. This is where we excel with customer connection and innovation—observing the work and turning those insights into individual products or custom kits, matching the tools to the specific task. It is a business rooted in the essential, both domestically and internationally.

And with that, critical industries offer an ongoing and robust opportunity. And as such, we continue to invest in those possibilities—capacity and building our understanding of the work—and it is paying off. The industrial business—our critical industries operation—showed considerable strength in the quarter, growing high single digits with particularly great and broad strides in aviation, heavy duty, and natural resources. That is our market—vehicle repair—performant not just in this interval, but driven by continuing secular trends of aging and complexity. And despite the uncertain environment, those secular trends keep it moving. The metrics say being a tech is a great place to be. And Snap-on Incorporated is keeping up, pivoting to match the current tech preferences with great products.

The shop owners and managers recognize that upgrading is table stakes to cash in on the robust vehicle repair demand that they are seeing. And Snap-on Incorporated has the equipment, the data, the systems to put them right on target. And we are reaching beyond the garage, taking full advantage. The industrialist quarter says it so. The critical industries are a bellwether. The essential is expanding, bringing with it more demand for precision and customization. It is all music to our ears. And one fast overall perspective on our results: how are we?

Fast overall perspective is that our results demonstrated once again the power of the Snap-on Incorporated Value Creation Processes—Safety, Quality, Customer Connection, Innovation, and Rapid Continuous Improvement—developing innovation solutions born out of insight and observations from standing right in the workplace. And those insights this quarter, combined with our dedication to RCI, enabled us to resist the turbulence of the day. You can see it in the numbers. It is an important and ongoing strength. Well, that is a macro overview. Now let us turn to the segments. In the C&I Group, sales were $381.6 million, representing an increase of $37.1 million, or 10.8%.

That includes $11.9 million in favorable foreign currency and an organic gain of 7.1%—gains across all the business units, but led by the Industrial Division with custom toolkits for critical industries and the constant demand for precision torque product. As I said, Industrial had a great quarter—high single-digit growth—that was without a significant rise in the military. Gains in almost every other sector, with aviation up strong double digits. Boom shackalacka. It was a great quarter. From an earnings perspective, C&I operating income of $54.9 million was up 3.2%, and the operating margin was 14.4%, down 110 basis points.

The quarter included 50 basis points of headwind from currency and the impacts from tariffs and rising material costs, which are particularly focused in C&I. Again, the quarter for the Power Tools divisions improved year over year, driven by new products and first-to-market innovation. Our Murphy, North Carolina, plant released two new 14.4-volt 3/8-inch cordless ratchets that extend what I think everybody says is our already powerful ratchet lineup. The additions focus on making tasks faster: break it loose, press the trigger, and zip the fastener off. Spinning at 550 RPM, which doubles the output of our standard unit.

Our new ratchets make quick work of applications with numerous bolts—great for dealing with timing covers, oil pans, engine rebuild—and many more applications. Garages use them all the time now. We launched two new versions: first, the CTR887 long neck for reaching deep into the engine compartment, and then the compact CTR881 designed specifically for navigating tight spaces, enabling access to the workpiece without removing adjacent components, expediting the repair and saving a lot of time. Remember, the techs feel the need for speed, and our two new ratchets bring just that. We also expanded on the sensational launch last quarter of our own nano access portfolio.

Again, we wielded customer connection, observing that there was trouble navigating crowded engine bays and penetrating the vast webs of sensors and wires hidden behind the dash on modern cars. So we designed the quarter-inch-drive CTNN22040 straight power driver with a narrow 90-degree head. I mean, this baby is small, and it goes everywhere, and makes the difficult easy. And it is loaded with features unique to the nano—a variable-speed trigger, easy forward and reverse selectors, and 600 fasteners on a single charge, all while operating at a lightning-for-small-power-tools 300 RPM. The techs love the fast payback solution, and it was another record-setting piece. C&I—a quarter with strong momentum in domestic markets.

Sales up 10.8%, 7.1% organically, led by critical industries, extending the Snap-on Incorporated brand out of the garage, propelled with strength in cordless power tools and precision torque. Let us go on to the Tools. Tools first-quarter sales were $406 million, up organically 3.4%—higher sales in both the U.S. and international networks. The operating income of $105 million was up 13.6%, and the operating margin in the quarter was 21.6%, up 160 basis points. Notably, the gross margin in the period also rose 140 basis points, reaching 47.7%, overcoming the impact of tariffs and rising material costs, prospering in a day in which cost is a question.

During the quarter, we maintained our pivot, wielding our customer connection, observing the work and using the insights to develop new products that align with the customers’ preference for short-payback items—items that also make the tedious and the complex easy. I think we have done that. That was demonstrated by two new products forged in our Milwaukee plant. First, the glow plug socket. Diesel glow plugs are essential for preheating cylinders to the optimal temperature that supports ignition, but replacing these common components is not simple. For example, on the 2006 to 2016 models of the popular GM Duramax engine, accessing these components is really cumbersome. And quite frequently, glow plugs are seized from exposure to harsh environments.

It takes considerable power to break them loose, especially in tight quarters. Standard tools will not reach without removing blocking parts. And both of those conditions—the seizing and the tightness of the compartments—make a routine job complicated. So our team went to work developing the new IPSTML12, a quarter-inch-drive, 12-millimeter swivel socket. It is 52% longer than our regular, and its swivel joint goes to 30 degrees—features that combine to reach the workpiece with general ease.

And the new unit is also designed with our Flank Drive geometry—that feature directs the force to the flats of the fastener and away from the corners, maximizing the torque, bringing the needed power while preventing rounding, efficiently completing the repair without damaging the components because of the power you had to apply. Another example of customer connection released in the back half of the year is a new socket configuration that matches up with our great nano access cordless products. Developing a power tool small enough to fit in your pocket was a great idea; we took it a little further. We designed an entirely new set of sockets to make the overall combination even smaller.

It is called the 119NTMLE. It is a 19-piece, quarter-inch tool set, consisting of 10 metric and 7 imperial-sized sockets that are 22% shorter and 8% narrower than the standard offering. And each item is secured in a foam pallet for good storage of these products. The techs value the accessibility and love the new sets—really amplifying the success of our nano product. Now, tool storage in the quarter generated some momentum, backed by the ongoing development of fast payback storage alternatives, new items like our KRSC46—that is a roll cart unveiled last summer.

Built in our Algona, Iowa, plant, it is a one-piece, fully welded body setup, which includes six drawers, each with a 120-pound load capacity—pretty high—and with an 11-inch-deep flip-top compartment ideal for storing power tools. And an important thing for a cart—because technicians want to match them up with the boxes they have already purchased—it is available in multiple paint and trim colors, and it is capable of matching any full-size box. So the unit provides ample space for techs looking to expand, but it has been designed to enable functionality without taking the leap into long-term payments. And that combination worked.

And in the quarter, also hot were accessories such as lockers, side cabinets, and work centers—options that increase storage space for existing boxes, all at a lower entry point than a new roll cab. Speaking of full-size roll cabs, we did release in the quarter a commemorative box celebrating our nation’s 250th anniversary entitled “A Tribute to America.” The 84-inch EPIQ is a beauty. It is gloss black case with white drawers and red trim, and the 12-inch power drawer. And at the top left corner, it has a blue panel overlay with 50 laser-cut stars. The red, white, and blue setup conjures the view of the American flag when you step back from it.

And the work center door displays symbolic images synonymous with U.S. history: the Statue of Liberty, Mount Rushmore, the iconic image of the Marines raising a flag on Iwo Jima, and the first moon landing. Each model has a serialized medallion, numbered 1 to 1776. It overcame the big-ticket reticence in the core, becoming a highly coveted box—epitomizing both the Snap-on Incorporated U.S. presence and the birth of our great nation. You know, some products are too exciting to pass up, even in the trough. That is the Tools pivoting to match the technicians’ current needs and preferences, linking manufacturing solutions right here in the U.S. that improve efficiency by making the tasks easier. Now on to RS&I.

Sales in the quarter were $485.3 million, up 2%, including $9.1 million of favorable currency effects. Organic sales were up only slightly to last year, but it was still enough to be the highest-ever sales quarter for the group. The volume reflects increases in our diagnostics and repair information products to independent repair shop owners and managers, offset by lower sales to OEM dealerships. In short, the EQS product business hit a flat spot. Operating earnings for the quarter were $119.5 million, representing a decrease of $2.6 million, or 2.1%, versus 2025 levels. The operating income margin of 24.6% included 60 basis points of unfavorable currency and compared to the 25.7% recorded last year.

The gross margins were 46%, up 30 basis points, despite the unfavorable currency effects and the impact of tariffs and higher material costs. So the lower OI margin reflected primarily the unfavorable currency and our investments fortifying our proprietary databases by enhancing them with large language activities—investments that we strongly believe will strengthen our advantages going forward. We know the complexity of today will only grow, and we will continue investing in software and equipment empowering shop owners and management with the resources required to confront that trend and to make more money. Case in point, air conditioning systems have evolved. Now they are not just for climate control, but they support overall vehicle performance and EV battery maintenance.

As an example, our PolarTech A/C recyclers roll out of our facilities in Conway, Arkansas. During the quarter, RS&I released the new ProSeries PolarTech—one machine for both popular refrigerant types, R-134a and R-1234yf. The Pro models are also loaded with features for managing a wide variety of vehicles: a large filter allowing for extended runtime, nitrogen leak testing for faster diagnostics, a two-stage vacuum necessary for supporting systems on small Civics to large Suburbans, and a 12-inch touchscreen for easy navigation even with gloves. The units have automatic functionality—techs can tackle another job while the recycling goes on—and a bright status light or an audible signal notifies the user when intervention is required. It makes recycling particularly more efficient.

The onboard database is terrific. It identifies the VIN and presets the unit with OEM vehicle specifications, preventing the time often wasted manually looking up the stats. Our new ProSeries is a great example for helping shop owners and managers navigate the complexity of new cars—hook it up, enter the VIN, the machine takes over—improving both productivity and error-proofing the process. You know, we are confident in the strength of RS&I. We keep investing to expand its position by making work easier with great products and with proprietary information. That is Snap-on Incorporated’s first quarter. Corporation’s overall sales $1.2072 billion—the highest first quarter ever. Organic sales up 3.4%. OpCo operating income up, and gross margins holding firm.

The C&I Group’s organic sales up 7.1%, the critical industries recording a bountiful quarter. Tools Group organic sales up 3.4%, gross margins up 140 basis points, and operating margin up 160 basis points. RS&I organic sales up slightly—still the highest ever. Gross margins up 30 basis points. Investments across the group to fortify our advantages in product and brand and in people. And the corporate EPS, $4.69—up again over 2025. We had strong results that overcame the headwinds—C&I extending the brand out of the garage, Tools Group successfully pivoting to customer preferences, and RS&I leveraging our proprietary offering to solve the complex. It was an encouraging quarter. Now I will turn the call over to Aldo.

Aldo Pagliari: Thanks, Nick. Our consolidated operating results for the first quarter are summarized on Slide 6. Net sales of $1.2072 billion in the quarter represented an increase of 5.8% from 2025 levels, reflecting a 3.4% organic sales gain and $26.9 million of favorable foreign currency translation. Sales in our Commercial & Industrial segment, or C&I Group, increased year over year, led by strong performances with critical industry customers and robust sales by our specialty torque operation. In our automotive repair markets, sales gains were achieved through our franchise van channel, while activity with repair shop owners and managers was essentially flat. From a geographic perspective, consolidated sales were up across all regions.

Consolidated gross margin of 50.4% compared to 50.7% in the first quarter last year. The decline of 30 basis points primarily reflected 40 basis points of unfavorable foreign currency effects. In addition, the benefit of increased volume and savings from the company's RCI initiatives were largely offset by higher tariffs and other material costs. As you may recall, many of the incremental tariffs did not go into effect until 2025, and as such, first quarter last year did not include those additional costs. That being said, Snap-on Incorporated is relatively advantaged in the current tariff environment by principally manufacturing in the markets where it sells; however, our costs can be somewhat impacted by trade policies.

Operating expenses as a percentage of net sales of 29.6% compared to 29.4% in 2025, primarily due to increased personnel costs and expanded technology investment, partially offset by the favorable effects of sales volume. Our technology investments include further strengthening of our core infrastructure, as well as broadening the use of large language models across key business functions to improve productivity. Operating earnings before Financial Services of $250.8 million in the quarter compared to $243.1 million last year. As a percentage of net sales, operating margin before Financial Services of 20.8%, including 40 basis points of unfavorable foreign currency effects, compared to 21.3% reported in 2025.

Financial Services revenue of $101.1 million in the first quarter compared to $102.1 million last year, while operating earnings of $68 million compared to $70.3 million in 2025. Consolidated operating earnings of $318.8 million compared to $313.4 million last year. As a percentage of revenues, the operating earnings margin of 24.4% included 40 basis points of unfavorable foreign currency effects, compared to 25.2% in 2025. Our first-quarter effective income tax rate was 22% in 2026, and 22.2% last year. Net earnings of $247 million, or $4.69 per diluted share, compared to $240.5 million, or $4.51 per diluted share, in 2025. Now let us turn to our segment results for the quarter.

Aldo Pagliari: Starting with the C&I Group on Slide 7, sales of $381.6 million rose $37.1 million compared to 2025 levels, reflecting a 7.1% organic sales gain and $11.9 million of favorable foreign currency translation. The organic increase includes gains in each of the segment's operations, including a high single-digit improvement with customers in critical industries, and a rise in the specialty torque business. The strong demand in critical industries includes higher sales in the quarter to customers in U.S. and international aviation, heavy duty, and natural resources. Shipments serving military applications, however, were essentially flat year over year, but reflected an improving trend from activity in 2025. Additionally, our European-based hand tools business also contributed to sales growth in the period.

Gross margin of 40.3% compared to 42.6% in 2025. This decline is primarily due to higher tariffs and material costs, and 50 basis points of unfavorable foreign currency effects, partially offset by benefits from the increased sales volume. Operating expenses as a percentage of sales of 25.9% in the quarter improved 120 basis points from last year, primarily reflecting the higher sales volume. Operating earnings for the C&I Group of $54.9 million compared to $53.2 million in 2025, and the operating margin of 14.4%, including 50 basis points of unfavorable currency, compared to 15.5% last year.

Aldo Pagliari: Turning now to Slide 8. Sales in the Snap-on Incorporated Tools Group of $480 million compared to $462.9 million last year, reflecting a 3.4% organic sales gain and $7.2 million of favorable foreign currency translation. The organic rise is due to low single-digit gains both in the U.S. and in the segment's international operations. During the quarter, while we had some success with featured tool storage products, we believe our ongoing pivot to shorter payback items continued to temper the persistent uncertainty of technician customers in the current environment. Having said that, we were pleased to see the positive uptake of tool storage products during the period.

Gross margin improved 140 basis points to 47.7% in the quarter, from 46.3% last year, mostly due to increased sales and savings from the segment's RCI initiatives, partially offset by higher material and other costs. Operating expenses as a percentage of sales of 26.1% compared to 26.3% in 2025. Operating earnings for the Snap-on Incorporated Tools Group of $105 million compared to $92.4 million in 2025. The operating margin of 21.6% improved 160 basis points from last year.

Aldo Pagliari: Turning to the RS&I Group shown on Slide 9. Sales of $485.3 million compared to $475.9 million a year ago, primarily reflecting $9.1 million of favorable foreign currency translation. On an organic basis, a low single-digit increase in sales of diagnostic and repair information products to independent repair shop owners was offset by decreased activity with OEM dealerships and managers. This decline primarily reflected lower sales associated with OEM programs in North America, which more than offset higher revenues with OEMs in Europe. In addition, sales of undercar equipment in the quarter were essentially the same as last year.

Gross margin of 46% compared to 45.7% last year, primarily due to the favorable business mix and savings from RCI, partially offset by higher tariffs and material costs. Operating expenses as a percentage of sales of 21.4% compared to 20% in 2025. This increase is largely due to 60 basis points of unfavorable foreign currency effects, higher personnel costs, and expanded technology investment, including those in support of the segment's growing software-based businesses. Operating earnings of $119.5 million compared to $122.1 million last year. The operating margin of 24.6%, including 60 basis points of unfavorable currency effects, compared to 25.7% reported in 2025.

Aldo Pagliari: Now turning to Slide 10. Revenue from Financial Services of $101.1 million decreased $1 million from last year, primarily due to lower interest income resulting from a year-over-year decrease in the size of the average portfolio in the period. Financial Services expenses of $33.1 million increased from $31.8 million in 2025. However, provisions for bad debts improved by $300 thousand from those recorded in the first quarter of last year. As a result, Financial Services operating earnings of $68 million decreased $2.3 million from last year's levels. In the first quarter, the average yield on finance receivables was 17.6% in both 2026 and 2025, while the average yield on contract receivables was 9.1% in each year.

Loan originations of $264.6 million in the first quarter represented a decrease of $4.1 million, or 1%, from 2025 levels.

Aldo Pagliari: Moving to Slide 11. Our quarter-end balance sheet includes approximately $2.5 billion of gross financing receivables, with $2.1 billion from our U.S. operation. For extended credit, or finance receivables, the U.S. 60-day-plus delinquency rate of 1.9% is down 10 basis points from 2025. Additionally, the rate is down 20 basis points from last quarter, reflecting the typical seasonal decrease between the fourth and first quarters. Trailing 12-month net losses for the overall extended credit portfolio of $72.9 million represented 3.75% of outstandings at quarter-end. We believe that these portfolio performance metrics remain relatively balanced, considering the current environment.

Aldo Pagliari: Now turning to Slide 12. Cash provided by operating activities of $168.7 million in the quarter represented 145% of net earnings and compared to $298.5 million last year. An improvement of $70.2 million, or 23.5%, from comparable 2025 levels largely reflects decreases in working investment versus increases last year, and higher year-over-year net earnings. Net cash used by investing activities of $28.6 million mostly reflected capital expenditures of $21.2 million and $5.1 million for acquisition of a former independent Car-O-Liner collision distributor in Australia. Net cash used by financing activities of $211.1 million included cash dividends of $126.8 million and the repurchase of 267 thousand shares of common stock for $99.9 million under our existing share repurchase program.

As of quarter-end, we had remaining availability to repurchase up to an additional $234.1 million of common stock under our existing authorizations.

Aldo Pagliari: Turning to Slide 13. Trade and other accounts receivable of $890.7 million represented an increase of $9.3 million from 2025 year-end levels due to the higher sales volumes. Days sales outstanding were 67 days in both periods. Inventories decreased by $4.7 million from 2025 year-end, primarily due to $5.6 million of foreign currency translation. On a trailing 12-month basis, inventory turns of 2.4 were the same in both periods. Our quarter-end cash position of $1.7533 billion compared to $1.6245 billion at the end of 2025. In addition to our existing cash and expected cash flow from operations, we have more than $900 million available under our credit facility.

There were no amounts borrowed or outstanding under the credit facilities during the quarter, nor was any commercial paper issued or outstanding in the period. With respect to our outstanding debt, notes payable and current maturities of long-term debt increased by $300 million, reflecting the reclassification of our March 2027 unsecured 3.25% notes to current status. That concludes my remarks on our first quarter performance. I will now review a few outlook items for the remainder of 2026. With respect to corporate costs, we currently believe that expenses will approximate $28 million each quarter. As a reminder, in 2025, earnings per share included a $0.31 nonrecurring one-time benefit from the RS&I Group legal settlement.

We expect that capital expenditures for the year will approximate $100 million, and we currently anticipate that our full-year 2026 effective income tax rate will be in a range of 22% to 23%. I will now turn the call back to Nick for his closing thoughts. Nick?

Nick Pinchuk: Well, thanks, Aldo. Our markets are resilient and strong. And it is a strength not dependent on the ups and downs of the economic cycle. They are rather driven by the solid secular trends of aging, rising complexity, expanding criticality. And these are, of course, turbulent times. The hits just keep on coming—continuing tech uncertainty, unfavorable currency diluting our margins, the impacts of inflation, and the fluctuation in government policies. They all serve to cloud the horizon and weigh on consumers. We see some green shoots—in our Tools Group and our overall sales gains, and in our nascent increases in tool storage. We do see encouraging signs, and we believe our future is quite positive.

And as such, we continue to expand our investments in what we believe are for Snap-on Incorporated corridors of decisive advantage. You can see the numbers turn across the face of the quarter—progress along our runways for growth and for improvement. We are enhancing our franchise network, and we are extending further into critical industries—growing substantially even while military is flat. And we are wielding our Snap-on Incorporated Value Creation Processes with effect—launching great new products in customer connection and innovation. And we are effectively bringing RCI to bear on the major challenges of the day, keeping gross margins strong against the winds. And we love to say it all.

C&I sales up 10.8% as reported, 7.1% organically, with the critical industries leading the way with high single-digit growth. The Tools Group, back to positivity with increases of 5% as reported, 3.4% organically. Gross margins strong at 47.7%, up 140 basis points. OI margins 21.6%, up 160 basis points. And RS&I volume up slightly in the quarter, but still enough to record the highest sales ever in the period. RS&I gross margin of 46%—up 30 basis points against 60 basis points of unfavorable currency effects. OI margins are still robust at 24.6%, but down 110 basis points from last year, reflecting currency and what we believe are powerful investments.

In the overall corporation, sales up 5.8% as reported, 3.4% organically—making it the highest first quarter ever and the second highest of all our quarters. Gross margin is 50.4%—strong against the wind. OI margins, 20.8%—also strong, but down 50 basis points, with 40 basis points of unfavorable currency effects, and reflecting the decisive investments. And the EPS, $4.60—up again. This period was a demonstration of the resilience of our markets, the power of our model, and the skills of our team—making progress in the blizzard and still investing in our future. Looking forward, we proceed with confidence. And we are confident and convinced regarding a positive future.

We are confident because we know the special nature of our markets—driven by powerful secular trends. We know the strength of our advantages in products—Snap-on Incorporated really does make critical work easier. And we know our advantages in brand—Snap-on Incorporated stands alone. The Snap-on Incorporated name really is the singular sign of the pride and dignity working men and women take in their professions. We are confident because we know our advantages in our people. Our team is committed, capable, battle-tested. Our team just does not aim to succeed. Snap-on Incorporated expects to succeed. As such, we believe that propelled by these advantages, Snap-on Incorporated will continue to move forward positively throughout 2026 and well beyond.

Now, before I turn the call over to the operator, I will speak directly to our franchisees and associates. I know many of you are listening or will be hearing this later. Our progress in the period—strong sales and holding firm against the challenge of the day—has been a result of your efforts. Your performance in the quarter—you have my congratulations. For the energy and capability you bring to the enterprise every day—you have my admiration. And for enlisting your future, your dedication, and your confidence in our team—you have my thanks. Now I will turn the call over to the operator. Operator?

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. At this time, we will pause momentarily to assemble our roster. The first question today comes from Bret Jordan with Jefferies. Please go ahead.

Bret Jordan: Hey, good morning, guys. In the prepared remarks on C&I, you talked about heavy duty specifically within the stronger categories. Do you think you are seeing a cyclical trend there—that after a long softness in the heavy-duty market, there is some improvement? Or is this a product or short-term factor?

Nick Pinchuk: I would not say we saw so much softness in heavy duty, Bret. I cannot say there is not some macro trend, but we believe it is because we are understanding the work around heavy duty more every day, and this leads to more effective, complex, and customized solutions, which people are signing up for. We think when we do this, yes, we are following the markets, but we are also capturing some share in our business.

Bret Jordan: And I guess also in the prepared remarks, you talked about restarted momentum, then you talked about green shoots a couple of times. Could you talk about maybe the cadence of the quarter? Obviously, the last month had some pretty significant geopolitical events going on. But for the underlying trend, are you seeing that the volumes in the garages are picking up—that is driving this green shoot?

Nick Pinchuk: I think a couple of things. It is hard for us—a month is not really significant progress. And so when we look at the quarter, we can make no conclusions about the effect of the war on where the world is going. But I will tell you this: the green shoots were associated principally with tool storage and the sales of those items. And I just had recent conversations with the franchisees. They sounded pretty optimistic to me. They were talking proudly about the Epic box with the red, white, and blue—“I was able to get two of them,” “I got one of them.” They seemed pretty positive.

And I can tell you franchisees do not hold back when they talk to me. I get a lot of complaints, and these conversations were pretty positive. So I put that together with the nascent tool storage increase and our total sales and say that is a green shoot. But it is one quarter. We do not give guidance, and you never really know. But it is better than a poke in the eye with a sharp stick—what we got.

Operator: The next question comes from Scott Stember with Roth. Please go ahead.

Scott Stember: Good morning, and thanks for taking my questions. Nick, can you talk about how some of the other subcategories in Tools did—whether it is hand tools, power tools, diagnostics?

Nick Pinchuk: Sure. Look, Tools was up. Power tools was up. Diagnostics was tepid. In fact, it was challenged this period, but had some difficult comparisons last year. So that is the way it went. Pretty much most things were up, except diagnostics was a little weak in this period.

Scott Stember: And as far as sell-in to the van channel versus sell-off of the channel, any meaningful differences?

Nick Pinchuk: No. I do not think one quarter is meaningful in this kind of thing, but it is in the same zip code as the growth—up 3.4%. For example, the 3.4% total was also what happened in the United States, and the sales off the van were in that same ballpark. It is never exactly the same, but over time it kind of rolls off. We felt pretty good about the sell-off the van this quarter.

Scott Stember: Just last question on tariffs. I know that you guys have done a great job of being relatively insulated. But with some of the recent changes that we saw, is there going to be any change to that narrative? And to the extent that you have had some payments that you have made, are you looking to pursue some rebates with the exclusions going away?

Nick Pinchuk: Tariffs these days are a blizzard. They changed the 232 rules, and they added 122—it is like numerical salad. We do not think tariffs are going to change very much actually going forward—not planning or expecting some changes. Now in terms of refund, Aldo has been rehearsing his answer for a while here. Aldo, go ahead.

Aldo Pagliari: Well, actually, I have only been rehearsing since April 20. They opened a portal for people to apply for refunds. Our view is—first, I want to emphasize—tariffs are not as significant to Snap-on Incorporated as they might be to many other companies out there. But our strategy is to protect the fact that we do not want anything to expire. If you do not file for rebate through the portal, you run the risk that things go past what they call the liquidation date, and then you can never challenge it—even if one wanted to. So that is our strategy right now. We are not depending on it; we are protecting our rights so they do not expire unchallenged.

Nick Pinchuk: I would just add—we are not depending on anything out of this. I am not sure what is going to happen. It is unsure what will happen with tariff refunds and when they will be paid, how it will all work. For us, we are just making sure we keep ourselves in the game and not depend on anything.

Scott Stember: Got it. That is all I have. Thank you.

Operator: The next question comes from Luke Junk with Baird. Please go ahead.

Luke Junk: Good morning, Nick. Maybe to kick it off here—there has been a lot of chatter about the level of tax rebates this year in the U.S. Just curious if you saw any impact from that in the Tools Group or maybe the Finance company and, if so, any links to that?

Nick Pinchuk: It is hard to say. On the finance company—you did point out—originations were kind of flattish, and the losses did creep up a little bit. But the 60-day delinquencies are better both sequentially and year over year—that is a pretty good thing. What the result of that is not clear, but our guys were talking about improvement in that area before we thought tax returns were in play. When I go through the garages, unlike the standard story about people at the grassroots, most of these people do not let this money burn a hole in their pocket. They tend to say—I am putting it in a bank, or I am going to pay off some debt.

So maybe that could have worked at paying off the debt; I am not so sure. None of the franchisees I talked to mentioned it. I did not prompt them, and maybe if I had, they would have said it is great for us. I do not think we are seeing it as a big factor, but that is hard to say.

Luke Junk: Got it. Switching gears to C&I, could you remind us on the military exposure within critical industries specifically? I know you mentioned seeing a lot of growth there right now, but just in terms of past experience and the impact that tends to be a little lagged when military activity picks up.

Nick Pinchuk: The C&I business is a pretty good business—it is well over $100 million in a quarter. The military is one of six different segments and towards the top of that list. Lately, the military has been down—last year, military was down double digits. We got a little bit back in the fourth quarter, and this year it stayed flat, so it has improved some. We expect the military to improve going forward. History says that when conflicts like this are over, refurbishment becomes important. They restock and reverse, so we usually get good business out of that.

On top of which, I think the nation is saying, given the environment, we have to stock up a little bit more on military. So we expect that to expand. What I loved about the quarter was, the military did not help us and, boy, some of those other areas—like aviation—were gangbusters. And it is pretty profitable. Industrial had a terrific quarter. The industrial business seems pretty good to us. It keeps expanding, and it is mostly because we keep understanding the work better in each of those places. That is our principal value-creating mechanism—to understand the work and create products that are irresistible to customers, whether customized or not.

As you understand the work better, you get a bigger product line. That is what we are doing. It seems to be working.

Luke Junk: Got it. I will leave it there. Thank you.

Operator: The next question comes from Christopher Glynn with Oppenheimer. Please go ahead.

Christopher Glynn: Thanks. Hello, everyone. Just wanted to keep going on the C&I themes you just talked about, Nick, because the comments you just made kind of reinforce some of the stuff in your prepared remarks. The C&I growth historically has been pretty intermittent, rather than hitting a growth cycle and a consolidation cycle. So I am wondering if you are suggesting something culturally and in the bones has gotten better about the work—kind of like, you know, some companies really hit stride with new tools out of the pandemic.

Nick Pinchuk: I think you are right about that. We have seen it happen a couple of times. We were turning along in critical industries, and then we expanded capacity here at Snap-on Incorporated. We added a whole building that allowed us to build more customized kits and expand on that, and it shot up. Then it hit a little bit of a pause when the military started sputtering, and then it is coming back. Behind all this is the idea that I really do believe we are gaining share because our products are getting better.

It is hard to talk about any one product because most of them are kits, but in those kits, configuring them such that they meet the problem—if you have a particular jet aircraft you want to deal with in terms of maintenance or manufacturing—we will put you right on target. We have some of those. I am not saying we are immune to cycles, because it certainly has proven not to be, but what has elevated the game is capacity.

Christopher Glynn: Have you instituted new organizational layers or structures or account realignments?

Nick Pinchuk: Capacity. We are learning how to wield the capacity better. We have added people in the field; we have learned more about the work. Also, we have created a capacity situation where we can deliver quicker and more effectively. Those kinds of things have combined to give us some acceleration. What happens is you add something, then you learn how to do better and better with it. When you start something up, it helps you, and then you realize what you have and work on it. It is the essence of RCI. What you are seeing there is in the bones of Snap-on Incorporated Value Creation—figuring out more improvement—and secondly, having a better product. I believe that is the situation.

Christopher Glynn: And then my other one, just on SOFCO originations. It sounds like storage might be turning a corner and you have a pretty good comparison backdrop for a while there. Diagnostics was off in the quarter a little bit, but not at the RS&I level. Even Tools had a couple of really nice diagnostic quarters in the middle of last year. Seems like maybe the ingredients are in place for originations to start to grow, and the commemorative unit in particular sounds really cool and is hitting some stride at a high price point. Do you feel like that is the direction?

Nick Pinchuk: The originations were flat in the quarter, roughly. I use the word green shoots particularly because I am not sure what the increase in tool storage means. I do think it shows some thaw. We could not get arrested before with big boxes. Now you saw the Tribute to America, and I have the feeling that it sold well not only because it is a compelling offering, but also because maybe the hurdles were a little bit lower. We will see how that plays out. I think it is favorable—it shows tool storage is not completely dead. In fact, it was a nice strong quarter for tool storage.

Operator: The next question comes from Gary Prestopino with Barrington Research. Please go ahead.

Gary Prestopino: Good morning, all. Sorry if I missed this, but could you maybe just talk about how much tool storage was up year over year?

Nick Pinchuk: I do not want to get nailed to a cross on exact numbers, but tool storage was up more than the average. It was one of the leading items. A quarter is not definitive, but I still feel pretty good about it. I am not here to declare victory, but I feel good about it.

Gary Prestopino: So if I ask this another way—was a lot of that due to this new lower price point product that you put out there for the techs?

Nick Pinchuk: Some of it was due to that. I talked about the new roll cart that came out. We made it available in all these colors. You might think that is trivial, but it is not—people want a roll cart to match their box. If they have a candy apple red box with carbon trim, they want the roll cart to look like that. If you make that available, it tends to sell more. The roll cart is pretty sturdy, so that was another contributor. Yes, the Tribute to America was a good contributor too, but it did not account for everything.

Gary Prestopino: You said the franchisees are a little more optimistic than they had been. Do you attribute that to some of what you have done strategically with shorter payback products, or are they really starting to see a turn in the appetite for technician purchases of tools?

Nick Pinchuk: Probably some of both. Franchisees usually talk to me about products they do not like or how easy or hard it is to sell. When I say they were positive, they were not saying it was hard to sell, and they have said that before. I did not talk to every franchisee—it was a windshield survey—but the guys I talked to seemed pretty positive. And I do think it makes it easier to sell if we have offerings that match the preference. So I guess the answer is both things are in play.

Gary Prestopino: In the C&I segment, are you seeing increased demand from the data center market for specific tool kits?

Nick Pinchuk: We are seeing increased demand for specific products for the data center market in terms of the construction of the data center. We are being asked to quote, and we are finding business in those areas.

Gary Prestopino: What was the FX impact to EPS?

Aldo Pagliari: We had $0.02 of good news when it came to operating income from translation. When you look at the unfavorable currency remarks throughout the deck, that has to do with transaction negative variances, largely associated with our factories emanating out of Sweden and the United Kingdom to some extent.

Nick Pinchuk: So some good news there, Gary. The reason why we talked about the negative is, yes, it was positive on EPS but negative on the margins, because it added sales and did not add profits in proportion. It added a lot of sales and almost no profit.

Gary Prestopino: Okay. Thank you.

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

Sara Verbsky: 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 Incorporated. Good day.

Unknown Speaker: Goodbye.

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

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